| WILMINGTON, Del.
WILMINGTON, Del. Jan 8 Rare earths producer
Molycorp reached agreements with its junior creditors on Friday
that clear the way for the bankrupt company to accept bids for
the company and to ask creditors to vote on a plan to exit
Molycorp, the only U.S. producer and processor of the rare
earth elements that are used in cell phones and military
equipment, has been battling its bondholders who have alleged it
is doing the bidding of its lender, Oaktree Capital Management.
Lawyers for Greenwood Village, Colorado-based Molycorp told
a U.S. Bankruptcy judge it would allow advisers for the official
committee of unsecured creditors and a group of bondholders to
join calls and meetings about potential bids.
Molycorp has said in filings with the U.S. Bankruptcy Court
in Wilmington, Delaware, it had received 20 potential bids. On
Tuesday, Bloomberg reported that potential buyers from China and
Australia submitted nonbinding bids of more than $700 million
for Molycorp's processing operations. The company has estimated
the operations were worth less than $450 million.
Bids for the company's bonds have jumped this week from less
than 5 cents on the dollar to more than 12 cents as the
prospects for repayment have improved for bondholders.
An auction is scheduled for March 4.
The auction would include the company's closed mine in
Mountain Pass, California, which was once one of the world's
main sources for rare earths.
If bids fall short of a certain threshold, Molycorp has
proposed exiting bankruptcy through a reorganization plan,
excluding the Mountain Pass mine, under the control of Oaktree.
U.S. Bankruptcy Judge Christopher Sontchi on Friday cleared the
way for Molycorp to begin seeking creditors' votes for its
reorganization by approving the so-called disclosure statement,
which describes the plan.
Molycorp and Oaktree still face struggles with junior
creditors, who convinced Sontchi on Friday to strike a provision
in the reorganization plan that would deny payments to objecting
Luc Despins, a lawyer for the creditors committee, said he
plans to sue Molycorp's directors and officers over the
company's agreements with Oaktree. The committee also plans to
press claims against Oaktree, including for unjust enrichment,
at a confirmation trial beginning March 28.
Molycorp filed for bankruptcy in June with more than $1.7
billion in debt after prices for rare earths fell when China
lifted export restrictions.
The case is In re Molycorp Inc et al, in the U.S. Bankruptcy
Court, District of Delaware, No. 15-11357.
(Editing by Matthew Lewis)