Molycorp, Inc. has executed a restructuring support agreement with creditors that hold over 70% of the aggregate principal amount of the company's 10% senior secured notes. The agreement provides for a financial restructuring of the Company's $1.7 billion in debt and provides up to $225 million in gross proceeds in new financing to support operations while the Company completes negotiations with creditors.
To facilitate its financial restructuring, Molycorp and its North American subsidiaries, together with certain of its non-operating subsidiaries outside of North America, filed voluntary petitions under Chapter 11 of the Bankruptcy Code in U.S. Bankruptcy Court for the District of Delaware. The company's operations outside of North America, with the exception of non-operating companies in Luxembourg and Barbados, are excluded from the filings. Molycorp Rare Metals (Oklahoma), LLC, with operations in Quapaw, Oklahoma, also is excluded from the filings as it is not 100% owned by the Company.
Molycorp has obtained commitments from a group of its 10% senior secured noteholders, led by JHL Capital Group, JMB Capital Partners and QVT Financial LP, for up to $225 million in gross proceeds of debtor-in-possession (DIP) financing, subject to Court approval, which will be used to support operations during the Chapter 11 period. Approximately $40 million of this amount is expected to be made available to the company immediately after an initial Court hearing, with approximately another $90 million available subject to Court approval at a further hearing at the end of the first month of the case. The remainder is available on a delayed basis and subject to lender conditions. Final maturity for the DIP financing is November 30, 2015, which can be extended until December 30, 2015. The Company expects to exit Chapter 11 before the end of the year.
As part of the filings, the company filed a restructuring plan term sheet that broadly outlines the terms of the plan of reorganization that the Company expects to pursue. The plan term sheet provides for the discharge of the Company's more than $700 million in unsecured notes. The plan term sheet further calls for holders of the Debtors' $650 million in 10% senior secured notes to have their debt exchanged for a majority equity stake in reorganized Molycorp.
As is the case after a Chapter 11 filing, Molycorp expects to receive notice from the New York Stock Exchange informing the company that its shares will be delisted from the NYSE within nine calendar days of notification. The company expects that its shares will be traded on the OTC Pink Sheets exchange. The company previously announced plans to postpone until the second half of 2015 the annual meeting of shareholders while it completes this process.
Molycorp is being advised by the investment banking firm of Miller Buckfire & Co. and is receiving financial advice from AlixPartners, LLP. Jones Day and Young, Conaway, Stargatt & Taylor LLP act as legal counsel to the company in this process.
Molycorp is the only advanced material manufacturer in the world that both controls a world-class rare earth resource and can produce high-purity, custom engineered rare earth products to meet increasingly demanding customer specifications. With production facilities on three continents, the Company produces a wide variety of specialized products from rare earth elements and five rare metals (Gallium, Indium, Rhenium, Tantalum and Niobium).