Molycorp gets bankruptcy court OK to make technical plan amendments

By Caroline Salls

Pittsburgh, May 12 – Molycorp, Inc. received court approval of technical changes made to its confirmed fourth amended plan of reorganization, according to an 8-K filed Thursday with the Securities and Exchange Commission.

As previously reported, the plan was confirmed on April 8 by the U.S. Bankruptcy Court for the District of Delaware.

Molycorp said in the technical amendments motion that, as the company and its official committee of unsecured creditors continued to work on the technical steps necessary to implement the plan after entry of the confirmation order, it became “clear that the class 5A stand-alone distribution cannot be effectively administered without certain technical modifications to the plan.”

Before the changes were made, the confirmed plan specified that holders of class 5A claims in an amount less than $1 million were deemed to have elected to receive cash as their stand-alone distribution and that holders of class 5A claims greater than $1 million were deemed to have elected to receive equity as their stand-alone distribution.

All class 5A creditors are also entitled to elect an alternative distribution of cash or equity, as applicable.

To implement the treatment and distributions provided to class 5A creditors in connection with the stand-alone distribution, the company said the confirmation order approved a cash-out notice form that described how holders of convertible notes claims and 10% notes claims in the class would receive their distribution through the Depository Trust Co.’s (DTC) Automated Tender Offer Program (ATOP).

However, Molycorp said it became apparent that “ATOP cannot be used to effectuate the plan’s distribution scheme, particularly with regard to deemed elections of cash or class 5A equity, because there is insufficient transparency at DTC and via ATOP to effectively determine the identity of, and claim amounts held by, beneficial Holders of notes claims in class 5A.”

Specifically, the company said it is not possible to distinguish between holders of notes claims that are to receive cash or equity or to complete the procedures for paying that elect or are deemed to elect the cash-out option in the event of a class 5 cash-out oversubscription.

Plan changes

Under the modifications, every holder of a claim in class 5A will presumptively receive cash from the class 5A stand-alone cash distribution, regardless of claim size, but subject to the cash-out oversubscription.

Molycorp said every holder of a claim in class 5A will also be able to opt out of receiving cash, and instead receive its share of class 5A equity.

In addition, the modifications require holders who want to receive class 5A equity to make an election to that effect and to fill out the appropriate documentation to allow the debtors to complete distributions of the class 5A equity.

Also, rather than trying to work through DTC and ATOP, the company said Prime Clerk will manage the process for making distributions to class 5A creditors.

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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