Molycorp inks sale and plan agreement with 10% noteholders, Oaktree

By Caroline Salls

Pittsburgh, March 28 – Molycorp, Inc. reached a settlement with an informal group of its 10% noteholders, its official committee of unsecured creditors and Oaktree Capital Management, LP, according to a notice filed Friday with the U.S. Bankruptcy Court for the District of Delaware.

Molycorp said the settlement resolves all of the objections of the noteholders group to a previous agreement with its official committee of unsecured creditors, Oaktree and National Union Fire Insurance Co. of Pittsburgh, related to directors and officers claims issues, as well as noteholder objections to confirmation of Molycorp’s Chapter 11 plan.

Under the settlement:

• The noteholders’ $1 million credit bid will be deemed the successful bid for the sale of all cash collateral of the Molycorp Minerals debtors, other than an intercompany amount and any amounts resulting from the sale of a specified amount of inventory by Molycorp Minerals, LLC after the date of the settlement, the sale of intellectual property and related assets and contracts and the sale of mineral properties;

• Although Molycorp will seek approval of the credit bid at its sale and plan confirmation hearing, the approval of the credit bid is not a condition to confirmation of the plan and will only be approved to the extent it does not have an adverse impact on the confirmation of the plan in connection with the Molycorp downstream debtors or any of the downstream transferred assets;

• Oaktree and the noteholders have agreed to the funding of a reserve for the costs and expenses of seeking approval of the credit bid, carrying and severance costs before the completion of the Molycorp Minerals sale and winddown or Chapter 7 costs;

• All fees and expenses of the noteholders group incurred in connection with Molycorp’s cases will be paid on the plan effective date in an amount up to $5 million;

• The fees and expenses of the indenture trustee will be paid from the cash recovery allocable to the 10% noteholders on account of their allowed secured claim, and, to the extent legally permissible, the noteholders may submit any fees and expenses above $5 million for reimbursement to be paid out of the cash recovery;

• Molycorp will withdraw a motion for approval to surcharge some collateral, and the noteholders will withdraw a motion asking the court to order the company to comply with bidding procedures or convert Molycorp’s cases to Chapter 7; and

• The plan will be withdrawn in connection with the Molycorp Minerals debtors.

The plan confirmation and sale hearing are scheduled to begin on March 29.

Molycorp is a Greenwood Village, Colo., producer of materials from rare earth minerals that filed for bankruptcy on June 25, 2015. The Chapter 11 case number is 15-11357.

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