Molycorp Inc. (MCP:US), the unprofitable U.S. producer of rare earths, rose in trading outside of exchange hours after saying it obtained $400 million in secured financing from Oaktree Capital Management LP.
Oaktree will provide the funds via credit facilities and the sale and leaseback of some equipment at Molycorp’s Mountain Pass plant in California, the metals company said today in a statement. The shares jumped 10 percent to $2.25 at 4:15 p.m. in New York.
Molycorp, which has lost money (MCP:US) for 10 straight quarters, may run out of cash (MCP:US) early next year if operations don’t improve, according to data compiled by Bloomberg. Production of the elements used in electronic devices has fallen short of the company’s projections, leading analysts to forecast losses through 2015.
As part of the agreement, Greenwood Village, Colorado-based Molycorp will issue Oaktree with share warrants equal to 10 percent of its stock. Moelis & Co. advised Molycorp on the financing.
The material manufacturer’s $650 million of 10 percent, first-lien notes due June 2020 rose 2 cents on the dollar to 90 cents at 4:45 p.m. in New York, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. Those securities hit a record low of 88 cents on Aug. 4.
The metal maker, which owns the largest rare-earth deposit outside China, reported a second-quarter net loss of $83.9 million today, wider than the $70.7 million loss in the similar period last year, the company said today in another statement.
Prices for rare earths have slumped over the past three years, Bloomberg data show. Rare-earth elements are used in everyday consumer items like iPads made by Apple Inc. to Tomahawk cruise missiles made by Raytheon Co.
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