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Molycorp, Inc. Message Board

votingmachine 198 posts  |  Last Activity: May 20, 2015 5:03 PM Member since: May 12, 2004
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  • Reply to

    Whats the difference

    by ratio_rick May 7, 2015 6:10 PM
    votingmachine votingmachine May 7, 2015 6:47 PM Flag

    Mathematically, there is no difference. It is generally regarded as a bad sign when the stock price keeps going down. A reverse split corrects the price to a listing level price, but it is in response to a terrible trend.

    I would like more options possibilities ... more than the $0.50, $1, widely spaced option. And people claim the higher price makes the stock more available to short. And also more sought by funds that exclude low priced stocks.

  • votingmachine by votingmachine May 7, 2015 11:26 AM Flag

    These numbers are from the PR. They give a bit more granularity on the inter segment sales, which is new.

    Chemicals and Oxides:
    $36.8 million external revenues
    $5.9 million internal revenues
    $5.7 million OIBDA

    Magnets and Alloys:
    $50.5 million external revenues
    $1.6 million internal revenues
    $12.2 million OIBDA

    Rare Metals:
    $16.1 million external revenues
    $0.02 million internal revenues
    $1.6 million OIBDA

    Resources (Mt Pass):
    $2.5 million external revenues
    $8.3 million internal revenues
    ($34.8) million OIBDA

    The bottom line is still that Mt Pass makes very little, and the costs remain high there. The Magnets business makes money. $12.2/$52.1 = 23% profit margin. And if Siemens does add a revenue growth factor, that is where they have to make it work.

    The largest cash burn for the quarter was interest payments. They either need to get profitable, at a level that covers those, or they will fail. Or they need to eliminate the interest with a debt restructuring plan.

  • votingmachine votingmachine May 7, 2015 11:20 AM Flag

    Hard to say what the plan is. With the possibility of a debt-for-equity swap deal out there, they could also drop interest via that form of non-market placement. It is essentially a cash raise, but the cash is applied directly to debt. That would make the chances a bit better.

    I have to look closer, but the segment numbers are good, except for Mt Pass. I like that they broke out the inter segment sales finally:

    Chemicals and Oxides:
    $36.8 million external revenues
    $5.9 million internal revenues
    $5.7 million OIBDA

    Magnets and Alloys:
    $50.5 million external revenues
    $1.6 million internal revenues
    $12.2 million OIBDA

    Rare Metals:
    $16.1 million external revenues
    $0.02 million internal revenues
    $1.6 million OIBDA

    Resources (Mt Pass):
    $2.5 million external revenues
    $8.3 million internal revenues
    ($34.8) million OIBDA

    Man, that Mt Pass sucks.

  • votingmachine votingmachine May 7, 2015 9:40 AM Flag

    It looks like interest was higher than my number. At a quick glance, it was $46 million. CapEx was $6.3 million though.

    As a ballpark:
    $214 prior cash
    ($46) interest
    ($6) CapEx
    ($28) Ops loss
    -------------------------
    $134 present cash

    If they aren't cash flow positive from Ops next quarter, the interest expenses exhaust cash.

  • votingmachine votingmachine May 7, 2015 9:29 AM Flag

    The table I threw together, starting from the $214 million:
    Each quarter they have 3 things that deplete cash: Interest, CapEx, and Operating Losses.
    . . . . . . . . Interest . . . . CapEx . . . . . Ops . . . . . remaining
    Q1-15: . . $30 M . . . . . $15 M . . . . . $X M . . . . $167 - X million .... $134 million reported
    Q2-15: . . $40 M . . . . . $15 M . . . . . $Y M . . . . $112 - X - Y million
    Q3-15: . . $30 M . . . . . $15 M . . . . . $Z M . . . . $67 - X - Y - Z million

    I haven't read the report, just looking at the top line numbers in the PR's.

  • Reply to

    IS THIS WHY SHE CRASHED

    by peppydeedee May 6, 2015 9:15 PM
    votingmachine votingmachine May 6, 2015 9:35 PM Flag

    ... submitted the plan in late April and signed non-disclosure agreements, said the people, who asked not to be named because the matter is private. ...

    So someone with a desire for a lower stock price started some rumors.

    The negotiations with Apollo and the 2016 debt could be huge for MCP.

  • Reply to

    Take a step back

    by votingmachine May 6, 2015 11:52 AM
    votingmachine votingmachine May 6, 2015 2:09 PM Flag

    It does seem that the leak was from the side that is looking to get stock. And the leak seems to be pushing the stock price down, so the leak was effective.

  • Reply to

    Take a step back

    by votingmachine May 6, 2015 11:52 AM
    votingmachine votingmachine May 6, 2015 12:29 PM Flag

    I think it was lender-of-last-resort terms. They needed the money ... because they have yet to figure out how to turn a profit. And Oaktree gave them some money, but at terms that would be unreasonable for anyone solvent.

    I looked at the terms once and this is largely from memory:

    Molycorp gets:
    $250 million immediately
    $150 million with enough Mt Pass progress.

    Oaktree gets:
    Titles to Co-gen and Chlor-Alkali facilities.
    12% per year interest.
    24.5 million shares in the form of warrants.

    Oaktree also invested in the 2016 bonds, that will get repaid with the $150 million 2nd tranche. Not a big investment and it is not paid for from Molycorp, but they bought some bonds open market at a discount, so they are in a position to lend $150 million to Molycorp to repay themselves.

    Those terms may not include everything. But the bottom line is that There is no one willing to lend money to Molycorp. MCP just loses the money. And they already have too much debt to see a recovery in a bankruptcy proceeding.

    I think Oaktree's worst outcome is if Molycorp loses money for another year, and declares bankruptcy. Then they have to make the Co-gen and Chlor-alkali titles generate $250 million. There best outcome is definitely if Molycorp succeeds. They collect the interest, collect the principle, return the titles, and sit on a nice stock position.

  • Reply to

    20c/share in 3 months.

    by amfads May 6, 2015 11:47 AM
    votingmachine votingmachine May 6, 2015 12:13 PM Flag

    China is a bunch of fools. They seem willing to continue the absolute devastation of their own environment for a buck.

    My wife just got back from China. The main takeaway is the filth. Yes, great factories. Some fantastic industrial development. But really a huge amount of waste. And a huge amount of pollution.

    I have no idea what they will do. They certainly are a committed bunch to the proposition that they can exploit resources (including their own people) at a crazy rate. One would expect that at some point the communist party will have trouble staying in power with that approach.

    The world uses very little actual amount of RE's. There is the ability to supply the world from Mt Pass. Mt Pass probably has 20 million mt of RE's. And the world uses less than 200,000 mt per year. So Mt Pass has about a 100 year supply for the world. The China deposits are every bit as large. The question of price is one where there is no realistic accounting of the cost side, which should include environmental precautions and remediation.

    China will pay that price eventually. They are fools. Accepting an environmental cost for economic advancement is a tradeoff many nations have made. But China has gone beyond the level that is reasonable.

    I cannot make a 3 month prediction of the stock price because I can't predict the business plan. I am encouraged by the Siemens contract. That is big. If they can jumpstart the product sales in magnets, that could be a lifesaver. But it also could be entirely a big display window, without sales to follow quickly. China has plenty of RE's, but if Siemens is buying Magnaquench from MCP, that is still a profitable product line.

  • votingmachine by votingmachine May 6, 2015 11:52 AM Flag

    I see a bunch if VERY wild posts. Here are the facts:

    A group of the Senior debtholders approached Molycorp about a restructuring deal. That debt is not due for years. It is significant that they approached MCP, not the other way around.

    That debt has a market value. It has been about 50-cents-on-the-dollar in recent months.

    Thats really about it. We can speculate, but the fact is that there is an offer to MCP. They can turn it down. They can counter.

    Molycorp is also SEPARATELY engaged in the day-to-day business, which has the warning from the Annual report as to whether they have sufficient funds to remain in business longer than a short while. As long as they keep losing money, eventually they must fail.

    The debt has an extremely low market value. If you break it down into 3 different groups, the total reflects the idea that Molycorp can't find a way to earn the money to repay, and the liquidation value is not very high.

    Senior debt:
    Par value: $650 million
    Interest: 10%
    Market value: $325 million

    Oaktree Debt:
    $250 million ($400 million after 2nd tranche)
    Private placement with specific collateral so no market value
    Interest is high, and non-interest compensation (stock warrant) drives the return higher.

    Non-Secured Debt:
    Par Value: About $900 million
    Market value: About $100 million
    Interest: different series have different rates. The stock conversion (happy meal) offered a high return.

    If all the non-Oaktree debt was open market purchased and swapped for stock at a 20% premium, the company would issue about $500 million of stock. That would be massive dilution, as there is currently a market cap of $200 million.

    On the other had, the new market cap would be $700 million, and it would be a debt free Molycorp (except for the Oaktree side).

    It still doesn't change the fact that Molycorp has not made any money in a long, long time. And that can only end in failure.

    But the WAG's are getting a bit crazy.

  • Reply to

    reverse split approved april 29th?

    by doggonesteve May 5, 2015 8:07 PM
    votingmachine votingmachine May 6, 2015 8:42 AM Flag

    But of course everyone should vote for it as long as there is a chance of company survival. Being delisted for the share price would be more unwelcome than a reverse split.

  • Reply to

    reverse split approved april 29th?

    by doggonesteve May 5, 2015 8:07 PM
    votingmachine votingmachine May 6, 2015 8:41 AM Flag

    Approved only in the sense that they agreed to present the reverse split plan for a shareholder vote. I believe Delaware State laws (Molycorp is incorporated in Delaware) require a shareholder approval for reverse splits.

  • votingmachine by votingmachine May 5, 2015 5:16 PM Flag

    April 1st the stock price was $0.39. It was down sharply from the Q4-2014 quarterly report. The stock price has shown some resilience considering that news was all bad. The price is higher, and on strong volume. The leak today from two unnamed people says that a proposal was made in late April. It has to be considered that the price reflects some kind of informed insiders trading on that information.

    The only insiders that I can see who could act are the debt holders. I don't know if there is any connection ... I wonder though.

    Anyone got a model to explain what we see

  • Reply to

    Restructuring News

    by serious.rick May 5, 2015 4:06 PM
    votingmachine votingmachine May 5, 2015 5:04 PM Flag

    It depends on the deal. If Molycorp issues stock and the capital pays off debt, that is good if the exchange is good and bad if it is bad.

    The last equity for debt swap wiped out some debt at under half the par value of the debt. So if a group wants to trade $400 million of debt for $200 million of stock, I am inclined to view that favorably. That does dilute, but the net effect is a good one.

    Any restructuring proposal will have to be looked at, and possibly a counter offer prepared.

    If the equity for debt swap is under the half price that they had the last go round, I would think it is a good thing.

    Debt restructuring is necessary because the company finances are awful. But we have known that. So it isn't news that the finances are bad. What is news is that there is a group with an offer. If they swap debt for equity at half price, and then the company goes on to finally make some money (selling magnetic powder to Siemens, etc), then they equity might let them get back to a profit.

    I'm surprised at the Senior credit being the ones to offer a debt deal. They have the best position. I though that the non-secured debt would try to swap into equity.

  • Reply to

    RATIO RANGE FOR SPLIT 1:5 TO 1:50

    by peppydeedee May 4, 2015 5:54 PM
    votingmachine votingmachine May 5, 2015 11:03 AM Flag

    I'm a little surprise that anyone thinks this is news. Any company that gets a delisting notification (for share price under $1) is one that shareholders have to consider a reverse split as a strong possibility.

    I can point to at least one thread where this was discussed a long time ago. It seems possible that the share price might go back over $1, but that has to be considered ow probability. And even if it does ... a reverse split to put the share price at higher would reduce the volatility seen in low priced stocks.

  • Reply to

    14A FILED REVERSE STOCK SPLIT ON DOCKET

    by peppydeedee May 4, 2015 5:50 PM
    votingmachine votingmachine May 4, 2015 6:25 PM Flag

    The split doesn't effect company finances.

    The one year window probably exceeds the time he SEC will allow for continued listing compliance. A vote that approves a reverse split on June 25th is already beyond 6 months from the delisting notification. I assume they will only be able to string the SEC along for another year beyond that. Maybe not even that long.

  • Reply to

    delisting implications

    by casdks Mar 27, 2015 5:37 PM
    votingmachine votingmachine May 4, 2015 6:19 PM Flag

    The company Annual meeting is June 25th, not June 2.

    Since that is beyond the de-listing deadline, we can assume that the company is requesting, or has requested an extension of the time available to correct the listing price deficiency.

    The company will probably report the Q1 results next Wednesday, although they have not yet announced the date. The results are expected to be awful, and the CC will go along way to determining the market reaction. If they have any progress on Project Phoenix, that is the biggest thing.

  • Reply to

    delisting implications

    by casdks Mar 27, 2015 5:37 PM
    votingmachine votingmachine May 4, 2015 6:13 PM Flag

    We can now cross #2 off the list. The Form Pre-14A filed today indicates there will be a reverse split vote to be decided at the Annual meeting, which is scheduled for June 2

    Our Board has approved and recommended that our stockholders approve an amendment to the Company's Amended and Restated Certificate of Incorporation, as amended (the "Charter") to effect a reverse stock split of the Company's shares of common stock (the "Reverse Stock Split") at a ratio within a range of 1:5 to 1:50 (the "Ratio Range"). On April 29, 2015, the Board unanimously adopted a resolution approving the Reverse Stock Split and directing that it be submitted to our stockholders for approval. If this proposal is approved, the Board, or a committee of the Board, in its sole discretion, will have the authority to decide, within 12 months from the Annual Meeting, whether to implement the Reverse Stock Split and the exact ratio of the split within the Ratio Range, if it is to be implemented. If the Board or a committee of the Board decides to implement the Reverse Stock Split, then it will become effective upon the filing of the amendment to the Charter with the Secretary of State of the State of Delaware (the "Effective Date"). If the Reverse Stock Split is implemented, then the number of issued and outstanding shares of common stock or shares of common stock held by the Company as treasury stock would be reduced in accordance with the exchange ratio selected by the Board, or a committee of the Board, within the Ratio Range. The total number of authorized shares of common stock, however, would remain unchanged at its current total of 700,000,000. The form of certificate of amendment to the Charter to effect the Reverse Stock Split is attached as Appendix A to this Proxy Statement.

    The Board, in its sole discretion, may not elect to implement the Reverse Stock Split. However, ...

  • votingmachine votingmachine May 4, 2015 10:15 AM Flag

    I'm not sure the reverse split should be opposed because of psychological intimidation of the ignorant investor. If you can't look at the cost and the benefit, then you are just throwing money away anyway. An expensive stock can be a value proposition, and a cheap stock can be over-valued.

    A reverse split gets rid of the fractional pricing. It encourages shorts, who think they've won a victory, and discourages longs, who think they've been beaten. That is also just psychology. The reality is that it is a completely neutral thing to split or reverse split. The market is programmed to like splits and dislike reverse splits.

    I would like to see a reverse split because it would remove some of the volatility, and it would eliminate the current requirement for continued listing. I would also like a better options market. After a 100-1 reverse split, there would be options for $1 increments in price, and that is better than the current increments.

    IBM is trading at $175. I think at that price, there are not $1 option increments ... it looks like $2.50 increments. But proportionally, the $1 increments after a 100-1 reverse split are 1-cent intervals now. And if they did a 200-1 reverse split and had $2.50 increment, that is 1.25-cent increments at the current price.

  • votingmachine votingmachine May 1, 2015 10:32 AM Flag

    That's not huge. I would expect 20-1. That brings the share price to $20-ish and the share count down to 12 millionths.

MCP
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