Molycorp Said to Get No Bids for Entire Firm in First Roundby
Offers are limited to rare-earths miner's non U.S. assets
Buyers show little interest in idled Mountain Pass mine
Molycorp Inc. has failed to attract any offers for the entire company as a first-round bidding deadline approaches, according to people with knowledge of the matter.
The potential buyers, mostly rare-earths producers and processors based outside the U.S., are instead looking to take on part or all of the bankrupt rare-earths miner’s overseas business, said the people, who asked not to be named because the process isn’t public. Those bids do not include its idled Mountain Pass mine in California, the people said. Offers could still emerge in a later round.
The sale, which was announced on Nov. 3 and is part of a reorganization plan, has been tumultuous, with Molycorp’s lower-ranking creditors accusing the company of running a “specious sale process.” The contending creditors, which are negotiating with the company in mediation sessions ordered by the judge, argued that the proposal gives veto power to Oaktree Capital Management LLC, Molycorp’s senior lender, and makes it impossible to persuade potential buyers to join an auction.
The company, which is advised by Miller Buckfire & Co. and AlixPartners LLP, said last month that it would sell the entire company or certain assets, or reorganize the business if a sale doesn’t take place.
Jim Sims, a spokesman at Molycorp, and Alyssa Linn, a spokeswoman Oaktree at Sard Verbinnen & Co., declined to comment.
As part of the reorganization plan, Molycorp agreed that Oaktree, the Los Angeles-based investment firm that provided the company a debtor-in-possession loan to fund its operations in bankruptcy court, must be paid $514 million in order for any plan to go forward. That amount includes a $113 million prepayment fee for paying down the debt early. The official committee representing Molycorp’s unsecured lenders said in a Nov. 6 court filing that the sale allows Oaktree to “drive away other potential bidders.”
Molycorp’s $650 million of 10 percent first-lien notes maturing June 2020, whose holders are among the creditors questioning the sale process, last traded at 5.25 cents on the dollar on Oct. 22, dropping 90 percent in value this year, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.
Molycorp filed for bankruptcy in June following a collapse in prices for rare earths, which are chemical elements used in technology such as smartphones, electric cars and wind turbines.
The case is In re Molycorp Inc., 15-bk-11357, U.S. Bankruptcy Court, District of Delaware (Wilmington).