first of all a caveat
MCP will never anytime soon regain even half its old highs
and it will NEVER ever make new all time highs
the sooner you get that straight the sooner you can see things as they really are
the company missed a couple weeks ago and explained, at least in part, their funding shortfall and the range of options left to it---many longtime traders understood they would have to issue shares in an offering and began shorting the stock into the announcement. Many others were adding toshort positions. the general idea was that they could issue as much as 25-40m shares at between 7-8 pricing the offering at a discount to the market.
the snp downgrade made a notes offering hard to see at under 10% what they paid for the loan to complete the neo purchase.
the terms described today were much better than many expected. $10 with a maximum of 13.8m shares and the notes at 6%
the deals still have to be consumated but that is far fewer shares and at a higher price than many expected and the notes rate if done at 6% means they are only paying a 1% premium to repay the legacy neo notes.
also worth noting morgan stanley mcp's banker effectively capitulated a couple days ago by cutting their price target from 81 to 20---i know you thought it was a positive call---it wasnt they capitulated and tried to put the best face on it
and today the final bull dahlman rose capitulated by cutting the stock to hold from
both bullish signs--the last sellers are in or said another way
the last holdouts have faced reality
as a result of the offerings IF consumated mcp will be able to fund and finish phoenix on time and be able to ramp up volume on their largely light ree mining operation.
Much of the equity offering will likely be used to cover at least most of the large short interest in the stock in one move. say your desk is short 1m mcp you simply buy 1m at the offering and youre done covered in one move
and i expect following the close of the offering next wed that snp will lift the creditwatch due to funding at better than exp terms
cumulatively these things taken together argue for a bottom
though the company itself still faces a daunting slow global economy which is a drag on any commodity company
further demand and prices are likely to continue lower--though at a dimisnished pace.
MCP's management has been a pollyanna ---the cfo has already been replaced--the ceo may be next---one possiiblity is the neo ceo stepping in. if it happens this will confirm a bottom
taken together mcp will never recover to its old highs and they still face serious issues but as of today --note the high volume covering---at least they are facing the issues in the open head on
which is a good start
and why after a year of being short i started a position
finally i'd like to say that though i have been a bear so long on mcp that i was developing paws that i have tried to make reasoned arguments as i saw the issues
it turned out i was right---i hope at least some listened to me and saved some money
It remains to be seen whether this is the bottom.
As for Dahlman Rose capitulating, I think it's more a matter of Dahlman Rose giving up on getting investment banking business from Molycorp, and therefore now being free to put out a more honest opinion. Dahlman Rose was completely shut out of the latest deals - all the business went to Morgan Stanley and Credit Suisse.
I described the debt-financed acquisition of Neo Materials as a riverboat gamble - it was a leveraged bet on rare earth prices and company execution, and so far that gamble doesn't seem to have played out too well.
As for some posters on this board who claim that CEO Mark Smith is deliberately trying to tank the stock now, that's absurd. He was forced into issuing the convertibles, with all the shorting of common shares that goes with that (including the lending of shares to Morgan Stanley), and presumably he got the best deal he could get given the dire circumstances his company was in.
Nevertheless, Smith is a sleazeball hypester. I'm not clear on to what extent he drank his own kool-aid vs. just trying to get others to drink it without partaking himself.
My view on Smith? http://messages.finance.yahoo.com/Stocks_%28A_to_Z%29/Stocks_M/threadview?rt=1&bn=57599&tid=40808&mid=-1&tof=13&m=te&so=L&o=lpr&num=20 . Note that I had similar but smaller threads going back to early 2011.
This guy's in lala land making up stuff as he goes along.
Smith is balls over shoulders involved in MCP and he says Smith isn't drinking the kool-aid?
I love to see how the shorts try to post on here and beef up their side of things to make their position look stronger.
We got a little remedy for that. It's called the S.E.C.
The author of the original post mentioned that CEO may be the next to go.
I personally think that the business plan is a right one- they are building the whole supply chain management systems from mining to selling products PLUS they have facilities in Chine and Japan to directly sell there; this seems the best RE in the West.
However, the investor relations is a disaster...
This entry at least reasonable in comparison to most on the board.
Chine drastically reduced exports and on track to be RE importer.
MCP Canada is not a miner; they sell finished products immune (to large extent) to RE prices volatility
Prices on RE are down due to large inventories earlier; nor these inventories are almost gone, leading to higher RE prices
Bad: Management is dishonest or incompetent