Rare earth metals company files for bankruptcy

Molycorp Inc., Greenwood Village, Colorado, and its affiliated debtors have filed a joint plan of reorganization with the U.S. Bankruptcy Court for the District of Delaware. The plan proposes an emergence from Chapter 11 through either a stand-alone reorganization that would substantially improve its balance sheet or a sale of substantially all of its assets.  

Molycorp refers to itself as a “global, vertically integrated producer of rare earth products used in electronic, transportation, industrial and clean energy applications.” Some of the company’s R&D efforts have been geared toward setting up a recycling system to harvest and recycle rare earth metals from discarded electronics and fluorescent light bulbs.

The bankruptcy plan is supported by the Molycorp’s largest prepetition secured creditor and its post-petition lender, investment funds managed by Oaktree Capital Management LP and its affiliates, according to a Molycorp press release.

The plan “envisions a dual-track process pursuant to which the company’s assets are being actively marketed for sale, either as a whole or through the separate sale of its business units,” according to Molycorp. The company will pursue a process to sell its assets if the bid or bids received exceed certain value thresholds set forth in the plan. If the bids do not exceed the threshold values, the company will be reorganized with Oaktree as its shareholder around three of its four business units. IN either case, the company says it plans to sell its mining and mined materials processing facility in Mountain Pass, California, will be sold.

“If approved, the plan would help to significantly reduce our $1.9 billion of debt and cut our interest expense, putting us on a more solid financial and operational footing going forward,” says Geoff Bedford, Molycorp president and CEO.