Greenwood Village-based Molycorp Inc. is moving forward with a restructuring plan that some creditors said would benefit its senior lender, Oaktree Capital Management LLC, after a mediation aimed at devising a new plan failed, according to sources with knowledge of the matter.
The parties couldn’t agree to terms on how to handle a sale of assets, said the sources, who asked not to be named because the talks were private. As a result, the company’s existing restructuring plan remains in effect.
Creditors of the had been engaged in negotiations over the past two weeks after some lenders accused Molycorp of running a “specious sale process” that benefited Oaktree.
The contending creditor groups, which included the company’s largest holder of its senior bonds, JHL Capital Group LLC, maintained that the process gave Oaktree veto power and made it impossible to persuade potential buyers to join an auction.
The challenging creditors asked for a 10 percent stake in Molycorp’s assets outside the U.S. and 10 percent in warrants, but Oaktree countered with 5 percent in equity and 15 percent in warrants at various prices, the sources said.
The mediation’s collapse means the contending creditors must try to devise a new sales process if they seek to challenge the plan as bidding continues.
Ana Chapman, president of JHL Capital, which leads one of the creditors groups, and Alyssa Linn, a spokeswoman for Oaktree at Sard Verbinnen & Co., and Jim Sims, a spokesman at Molycorp, declined to comment.
