Get Started for Free Contexxia identifies hard-to-find pieces of information in SEC filings. No more highlighters, no more redlining, no more poring over huge documents. Molycorp, Inc. (1489137) 10-Q published on Aug 17, 2015 at 4:33 pm
Reporting Period: Jun 29, 2015
On June 25, 2015 (the "Petition Date"), Molycorp, Inc., together with certain of our subsidiaries, filed voluntary petitions for reorganization under chapter 11 (the "Chapter 11 Cases") of title 11 of the United States Code (the "Bankruptcy Code") in the United States Bankruptcy Court for the District of Delaware (the "Court"). The filing of the Chapter 11 Cases constitutes an event of default that accelerated several of our debt obligations. Please refer to Item 3 of Part II in this Report for more information on the default upon our significant debt securities. In addition, on June 25, 2015, we received a notice from the New York Stock Exchange ("NYSE"), advising us that, in light of the filing of the Chapter 11 Cases, trading of our common stock on the NYSE was no longer in compliance with its listing requirements and, on July 25, 2015, our common stock was officially delisted from the NYSE. Our common stock began trading on over-the-counter markets under the symbol MCPIQ on June 26, 2015. Please refer to Note 2 of this Report for more information on the Chapter 11 Cases.
Our ability to continue as a going concern is contingent upon, among other factors, our ability to develop a reorganization plan acceptable to our creditors, the Court’s confirmation of our reorganization plan, our ability to successfully implement such a reorganization plan, and our ability to comply with the covenants contained in the Secured Superpriority Debtor-In-Possession Credit Agreement approved by the Court on July 24, 2015 (the "Final DIP Credit Agreement"), which we are disclosing as a subsequent event in Note 18 of this Report. While we operate as a debtor-in-possession under Chapter 11, and upon approval of the Court, we may sell or liquidate assets and settle liabilities for amounts that differ from those reported in the accompanying condensed consolidated financial statements. In addition, the amount of our cash requirements during the bankruptcy proceedings will be dependent on, among other things, (i) the accuracy of our cost estimates for capital expenditures, (ii) our ability to develop and implement a limited operations plan for Mountain Pass that is acceptable to our creditors, pursuant to the Final DIP Credit Agreement (the "Limited Operations Plan" or "LOP"), (iii) stable or improved market conditions, (iv) our ability to sell any production of rare earths and other products manufactured pursuant to the LOP to external customers and our downstream facilities, (v) our ability to repatriate cash generated from our global operations, and (vi) the absence of payments on current and future contingent liabilities.
On August 22, 2012, we issued $360.0 million aggregate principal amount of our 6.00% Convertible Senior Notes due 2017 (the “6.00% Convertible Notes”) in a registered public offering. On August 28, 2012, the underwriters of the 6.00% Convertible Notes exercised their option to purchase an additional $54.0 million aggregate principal amount of the 6.00% Convertible Notes. Total net proceeds from the issuance of the 6.00% Convertible Notes were $395.7 million, after deducting the underwriting discounts and commissions. Certain of our directors, officers and other related parties purchased $6.4 million of the aggregate principal amount of the 6.00% Convertible Notes, for which we did not pay any underwriting discounts and commissions. The 6.00% Convertible Notes are our senior unsecured obligations with interest payable semi-annually in arrears on March 1 and September 1 of each year. The 6.00% Convertible Notes will mature on September 1, 2017, unless earlier repurchased, redeemed or converted in accordance with their terms, and will be convertible at any time prior to the second scheduled trading day immediately preceding the maturity date into shares of common stock, cash, or a combination thereof, at our election. The 6.00% Convertible Notes rank equal in right of payment to existing and future liabilities that are not expressly subordinated to the 6.00% Convertible Notes, and rank effectively junior to our existing and future secured indebtedness.
On June 25, 2015, or the Petition Date, Molycorp, Inc., certain of its direct and indirect wholly owned domestic subsidiaries and certain of its foreign subsidiaries in Canada, Barbados and Luxembourg, or collectively with Molycorp, Inc., the Debtors, commenced cases, or the Chapter 11 Cases, by filing voluntary petitions for relief under chapter 11 of title 11 of the United States Code, or the Bankruptcy Code, in the United States Bankruptcy Court for the District of Delaware, or the Court. The Debtors are continuing in possession of their properties and are managing their businesses, as debtors in possession, in accordance with the applicable provisions of the Bankruptcy Code and orders of the Court. Our operating subsidiaries in Hong Kong, China, Thailand, Japan, Korea, Germany, United Kingdom, Estonia and Singapore, and our subsidiary in Sri Lanka, are not Debtors under the Chapter 11 Cases. In addition, our majority owned joint venture in Quapaw, Oklahoma, is not a Debtor under the Chapter 11 Cases. The case is styled In re Molycorp, Inc., et al, U.S. Bankruptcy Court, District of Delaware, Case No. 15-11357.
On June 9, 2015, there was a fire in a building at our Molycorp Silmet facility in Sillamäe, Estonia involved in the production of Tantalum and Niobium rare metals. This incident did not affect our production of rare earths in Estonia, which we report under our Chemicals and Oxides segment. The extent of damages is still under investigation and the total reconstruction cost is yet to be determined. In the meantime, as of June 30, 2015, we have written off $2.3 million of assets related to the production of these rare metals, including inventory. While we wait to reconstruct our facilities in Sillamäe, we expect to restore approximately one-third of our rare metals production by the fourth quarter of 2015. However, there is no assurance that we will resume this limited or any temporary production of rare metals within our current plan or until we complete the reconstruction of our permanent facilities in Sillamäe. Sales of Tantalum and Niobium represented approximately 33% and 29%, in the aggregate, of our Rare Metals segment revenues for the three and six months ended June 30, 2015, respectively.