Molycorp Bids Said to Top Miner's Own Price Amid Sales Feudby
Molycorp Inc., the bankrupt rare-earths miner, received bids for assets that exceed the company’s own estimate of its value, according to people with knowledge of the matter.
Aluminum Corp. of China Ltd., a U.S.-traded mining company based in Beijing that’s also known as Chalco, offered to pay more than $700 million for the largest U.S. rare-earths producer’s non-U.S. assets, said the people, who asked not to be identified because the process is private. Shenghe Resources Holdings Co., a rare-earths miner and processor based in Chengdu, China, and lithium miner Galaxy Resources Ltd., based in West Perth, Australia, also made offers that exceeded the company’s appraised value range, which tops out at $443 million, the people said. U.S. private-equity firm Carlyle Group LP also has held talks about a possible bid, the people said.
The overseas bidders are willing to offer higher prices because they expect to gain value from the cost savings of combining two similar businesses, the people said. Molycorp, which is being advised by investment bank Miller Buckfire & Co. and law firm Jones Day, said in a Dec. 24 court filing that its assets are worth between $391 million and $443 million based on projected future cash flow.
The U.S. has been closely monitoring China’s global monopoly on mining the most valuable rare-earths, which are used in military technology such as unmanned drones, missiles and fighter jets.
Molycorp’s $650 million of 10 percent senior secured notes maturing June 2020 traded at 12.25 cents on the dollar at 3:26 p.m. in New York, up 7.4 cents from Dec. 17 when they last sold, according to Trace, a bond-price reporting system of the Financial Industry Regulatory Authority.
The bids may provide fuel for a group of creditors that are fighting the company’s reorganization plan, saying that it favors the company’s senior lender, Oaktree Capital Group LLC.
The creditors have asked a judge to let them sue Oaktree and the company’s advisers for what they say is a sham sale process designed to hand the company over to the lender, according to a court filing. The creditors have said in court papers that the offers the company has received are non-binding and that potential buyers haven’t yet fully evaluated the company’s finances.
Jim Sims, a spokesman at Molycorp, Alyssa Linn, a spokeswoman for Oaktree at Sard Verbinnen & Co., and Randall Whitestone, a spokesman at Carlyle, declined to comment. Representatives for Chalco, Shenghe and Galaxy didn’t respond to telephone calls and e-mail messages.
Molycorp filed a reorganization plan on Nov. 3 under which it would sell either the entire company or pieces of it, or reorganize under new owners. In the proposal, Molycorp agreed that Oaktree, a Los Angeles-based investment firm, must be paid $514 million for any plan to go forward.
The case is In re Molycorp Inc., 15-bk-11357, U.S. Bankruptcy Court, District of Delaware (Wilmington).