Oaktree Takeover of Molycorp Delayed by Too Many New Ownersby
Buyer wants rare-earths miner to be private after bankruptcy
Regulatory approvals for deal may take as long as six months
Final approval of Oaktree Capital Management’s takeover of bankrupt miner Molycorp Inc. is being delayed because the investment fund may have too many partners in the deal.
Although Oaktree affiliates would own more than 92 percent of the rare-earths company once its reorganization is implemented, about 3,000 people would own the rest, which may force the new Molycorp to register as a public company, Oaktree attorney Andrew Leblanc said in court Tuesday in Wilmington, Delaware. Oaktree and other creditors are trying to find a way to keep that from happening.
Molycorp has delayed asking U.S. Bankruptcy Judge Christopher Sontchi to sign a final order approving its reorganization plan until final language is worked out by creditor attorneys.
Even after the order is signed, the company may need as long as six months to get all the regulatory approvals needed to exit bankruptcy, Molycorp attorney Paul Leake said in court.
Attorney Luc Despins, who represents the creditors who will become minority owners, said he expects the issues holding up the judge’s signature to be resolved soon.
Molycorp filed for bankruptcy last year, blaming low prices for the rare earths it mines and processes. Sontchi said March 30 that he would approve the company’s reorganization plan, which would hand control to Oaktree, the company’s main lender, in exchange for the elimination of debt.
The plan gives Oaktree a profitable processing business but not Molycorp’s money-losing California mine, which will remain in bankruptcy where it will be liquidated.
Molycorp’s 5.5 percent bonds due in 2018 dropped 9 percent to less than 3 cents on the dollar Tuesday, according to data compiled by Bloomberg.
The case is In re Molycorp Inc., 15-bk-11357, U.S. Bankruptcy Court, District of Delaware (Wilmington).