Molycorp received approval from the U.S. Bankruptcy Court on $22 million in interim debtor-in-possession (DIP) financing provided by an affiliate of Oaktree Capital Management. The new funds will support operations going forward for an interim period while the company continues to negotiate with Oaktree and a group representing the secured 10% noteholders, both of which represent secured creditors that have presented competing DIP lending proposals.
The court acknowledged that DIP financing was essential to the entire company’s operations, and it approved the interim order and the accompanying lending facility. The court approved the facility solely on an interim basis and scheduled a final hearing regarding DIP financing for July 20. Both parties may provide improved and competing proposals for the financing, and both groups of lenders expressed their desire to provide financing on a final basis.
Molycorp now has the funds to continue its operations and to move forward on releasing funds to pay post-petition suppliers and some pre-petition essential suppliers, as previously approved by the court. Employees will continue to work their usual schedules, and purchasing of goods and services can move forward to ensure Molycorp’s customers can be serviced. Between now and the final hearing, the Mountain Pass facility will continue to run in an orderly and controlled way.
Molycorp filed its voluntary petitions under Chapter 11 on June 25. The company proposed a financial restructuring of $1.7 billion in debt and that would have provided up to $225 million in new financing to support operations while the company negotiated with creditors. Oaktree Capital Management objected to the plan and the court refused Molycorp’s request.
