Molycorp, the only global, vertically integrated producer of rare earth products, filed for Chapter 11 protect under the U.S. bankruptcy code. The company has executed a financial restructuring agreement with creditors for its $1.7 billion debt that provides up to $225 million to support operations while Molycorp completes negotiations with creditors.

“The actions we have taken today are important steps toward achieving a restructuring of our debt,” said Geoff Bedford, president and CEO, Molycorp. “Our operations in Europe and Asia are not a part of today’s filings, and these businesses are cash-flow positive and play a vital role in many key industries worldwide. All of the company’s facilities in North America and around the world will continue operating as usual.”

Molycorp has obtained commitments from a group of its 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 Molycorp immediately after an initial court hearing, with 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, which can be extended until December 30. The company expects to exit Chapter 11 before the end of the year.