Greenwood Village-based Molycorp Inc., the beleaguered miner of rare-earths minerals, could seek bankruptcy protection this month, The Wall Street Journal reported Wednesday night.
Citing unnamed sources, The that Molycorp hopes to cut its $1.7 billion debt load and is crafting plans such as debt-for-equity exchanges.
Senior bondholders and lender Oaktree Capital Management might lend Molycorp additional funds to keep the firm operational through the Chapter 11 restructuring process, according to the report.
Officials for Molycorp could not be reached for comment.
Melissa Tan, an analyst who follows Molycorp for R.W. Pressprich & Co. in New York, said the restructuring and reports of an impending bankruptcy do not come as a surprise.
“For Molycorp, demand was never the issue,” she said. “For Molycorp, production and management execution is the reason (why the company could file for bankruptcy soon).”
The report comes on the heels of news that Molycorp is delaying a $32.5 million interest payment, taking advantage of a 30-day grace period. In March, the company’s first-quarter earnings report included a “going concern” qualification, adding that the company might not meet its debt repayment obligations as they come due.
The Journal report sent Molycorp’s stock lower, closing at 35 cents, a 12.5 percent decline. The stock’s tumble to below $1 per share triggered a delisting warning from the New York Stock Exchange.
In the past year, the stock has traded between 28 cents and $2.94 — a far cry from the nearly $78 it traded at four years ago.
At that time, China clamped down on its production and exports of the rare-earth metals that are used in smartphones, wind turbines and cars. Investors flocked to Molycorp, boosting the stock.
Those shares slid amid a variety of factors, including China relaxing its restrictions; the costly expansion of its Mountain Pass, Calif., plant; and the inability to meet demand.
The U.S. Securities and Exchange Commission probed Molycorp on the , but the agency did not take any enforcement actions.
Molycorp’s cash position was at $133.6 million at the end of March, down $78 million from its balance at the end of 2014.
In the first quarter, Molycorp lost $102.3 million in the first quarter on revenue of $106.4 million. In the year ago period, Molycorp lost $86 million on revenue of $118.5 million.
The Canada-based rare earth metals-processing facility , which Molycorp acquired in 2012, remains a successful arm of the business, she said.
Alicia Wallace: 303-954-1939, awallace@denverpost.com or twitter.com/aliciawallace
