Molycorp’s fourth amended plan of reorganization confirmed by court

By Caroline Salls

Pittsburgh, April 1 – Molycorp, Inc.’s fourth amended plan of reorganization was confirmed on March 30 by the U.S. Bankruptcy Court for the District of Delaware, marking one of the final steps before Molycorp will be able to emerge from Chapter 11 protection as a newly reorganized company, according to a company news release.

Molycorp said the confirmed plan allows its downstream business units, Chemicals & Oxides, Magnequench and Rare Metals, to reorganize under new ownership with a significantly stronger balance sheet.

The company said the plan features a settlement agreement between an affiliate of funds managed by Oaktree Capital Management LP and unsecured creditors under which Oaktree will receive 92½% of the equity and the unsecured creditors will receive 7½% of the equity in the reorganized company.

As previously reported, a settlement was also reached on the purchase through a credit bid by an informal group of Molycorp’s 10% secured noteholders of the mineral rights and some intellectual property of Molycorp Minerals.

Molycorp’s Mountain Pass mine was excluded from the plan, and the equipment and surface property rights at the mine were excluded from the sale, the release said.

When the plan takes effect, Molycorp will emerge as a privately held company with a sustainable balance sheet and strong financial partners.

Under the plan, holders of general unsecured claims at Molycorp’s “downstream debtors” will be paid in full if the sale trigger occurs and will receive no distribution if it does not.

Holders of 10% notes claims will receive a share of 64.71% of a Molycorp Downstream intercompany amount and, if a downstream businesses sale trigger occurs, the net remaining portion of the sale proceeds that are allocable to the noteholders following satisfaction of all the DIP facility claims, Oaktree pre-bankruptcy claims and other senior claims.

The fees and expenses of the indenture trustee will be paid from the cash recovery allocable to 10% noteholders on account of their secured claims.

Holders of subordinated convertible notes claims and Molycorp interests will receive no distribution.

The company has been advised by the investment banking firm of Miller Buckfire & Co. and received financial advice from AlixPartners, LLP. Jones Day and Young, Conaway, Stargatt & Taylor LLP served as legal counsel to the company in this process.

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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