No mention. That is to be expected as the terms were sealed. A settlement could be at any time. But no details on how much or when.
Umm, that is worthless garbage. Anyone incapable of using a phone, but expecting public message boards are a venue for billion dollar deals is a useless idiot.
But yes, I plan on emailing everyone in the company that alexsgabor has billions of dollars ready to commit, but just needs the deal to be handled via the Yahoo MB. A 10 year contract for purchase of 40,000 metric tons per year will certainly be good news for MCP. I can't wait for this to be finalized and announced. Thank you so very much for this generous offer.
I'm offering to buy the entire output of the WORLD for 10 years. Please contact the WORLD for me.
I am even more generous than you. I will buy the entire Mt Pass for $3 billion, and lease it back to the company. I only require a 10 year lease, and a 40% equity position (terms of lease: $3 billion per year, paid in advance). I also will buy all the bonds for 75-cents on the dollar. Especially the senior secured ones trading near 100-cents on the dollar. Of course the company doesn't own those, so offering that deal to MCP is futile.
I've got to remember how pointless it is to post to CB. I don't understand the mental outlook that makes one take an unsupportable position, then delete it when it draws refutation. The financing deal is still not fully laid out. The details matter. It may be the sweetest deal that proves the fantastic value of MCP, or it could be an ordinary deal with costs and benefits.
The cash available to MCP is $400 million. That is a lot. And if later MCP pays nothing back, and Oaktree has a 10% equity ownership, then of course, CB is correct that Oaktree values 10% of MCP at $400 million. I just think that without full information, that would be an unlikely expectation for the deal. There will be costs and there will be benefits. If you find those persuasive enough, you can act on them with an investment decision, long or short.
Wow, you really like to post irrationally and then delete those posts, don't you?
I'm long. I'll reply here even tho the topic will be deleted.
I don't need to make a bear case. I presume the bear case would be that the stock will go down in value, based on a decline in the companies performance. Anyone can understand that. I don't agree with it, but MCP DID lose money. They DID just go borrowing again. They DID report that June production was hurt by problems. They DID say that July was also bad. They DID say that August is also effected.
Molycorp has a good business plan. If they deliver on it, longs will make a lot of money. If they fail to deliver on it, then the company will fail, and shorts will make money. So far, the failure side has been right. I don't see why facts are so anathema to you.
If I have a house worth $1 million and debt of $0.5 million, I have net worth of $0.5 million. If I sell the house for anything, it will be for $1 million. That asset sale doesn't reflect the current net worth value. You know that ... don't be a fool.
The equity position is warrants for stock purchase. We don't yet know the purchase price, or the time window. But the $400 million currently being made available is for a combo of assets and interest and warrants.
NOT 10% of the current value of the company. For a combo of assets and interest and warrants. That combo is worth $400 million to Oaktree.
I'm not saying it is a bad deal. But the deal is NOT $400 million paid for 10% of the equity. That is just ignorant.
LOL. My point is to provide the facts and the source. But you will delete your post quick enough. That is a direct copy-and=paste from note-17 in the 10-Q. The questions are things that I don't have answers for.
The !0-Q is now up on Molycorp's website. Here is note 17 on the financing to be:
In August 2014, we and certain of our subsidiaries entered into a commitment letter with Oaktree pursuant to which Oaktree will provide to us and certain of our subsidiaries up to $400 million in secured financing through credit facilities and the sale and leaseback of certain equipment at our Mountain Pass facility (the "Financings"). $250 million of the Financings will be available to be borrowed at the closing of the Financings, with the remaining $150 million available until April 30, 2016 if we satisfy mutually agreed financial and operational conditions. The Financings will be secured by certain of our assets and certain assets of our subsidiaries, will also be guaranteed by most of our subsidiaries, and will mature in 5 years, subject to certain springing maturity dates dependent on our repayment of certain outstanding debt, beginning with April 30, 2016. In connection with the Financings, we will issue to Oaktree warrants to purchase shares of our common stock equal to 10% of our outstanding common stock as of the closing of the Financings. The Financings are subject to various conditions precedent, including the accuracy of our representations and warranties, absence of material adverse events in our business and operations, and the negotiation of mutually acceptable definitive documentation.
It is a tricky financing deal ...
Sale of assets with a leaseback
Loan of cash at interest rates
Secured by certain assets ... that has to jibe with the senior secured asset priority.
10% (I'm calling it 25 million shares) equity sale
Lots of questions remain:
At current market price, 25 million shares represents about $55 million.
Warrants are an option to buy at a price ... but what is that price (the warrants will be low priced)?
What are the lease payments?
What are the interest payments?
What are the metrics for the remaining $150 million?
I think so. The interest cost is quite high as a per kg cost at the 1639 mt quarter they had. It gets a little better at a 6000 mt per quarter production. As a ballpark, $30 million interest with 6000 mt (6 million kg), is $5 per kg.
I tend to look at the straight costs and sales of operations, then the SG&A, interest, CapEx, etc, separate. The operations have to produce profits in excess of that overhead.
Well, not quite.
Some amount for 10% of the equity ... about 25 million shares.
Title to an asset.
10% of the stock.
Technically, they are paying $400 million for an asset with a lease, and getting an option to buy 25 million shares (at unknown price currently). The reversal of asset ownership is probably at the 12% interest rate that was mentioned.
The details are still getting finalized. My guess is that the market price of the stock will affect the warrant price.
Yes. I don't do technical analysis, but charts would say that there is a nice 10% day trade on the long side (or 2-day trade). We should see the stock price increasing. The company liquidity is nearly fixed (deal not fully finalized). The progress is slow, as always (we expect that), but there is progress, and the end point of lower costs at higher production are in view.
Maybe I'm too optimistic, but I would guess stock price goes up heading to the Q3 report, and if the progress on chlor-alkali and leach is positive, then it should continue up.
EDIT: not August, July. July production was like June, not August. It sounds like the August production will be down and September will be effected also.
Lanthanum and Nd/Pr are selling well. They don't say what the time delay on production to sales is but they mentioned that Nd/Pr production from Q2 will be sold in Q3.
The critical need is increasing sales volume and decreasing the cost.
In Q1 they sold 988 mt from Mt Pass and in Q2 they sold 974 mt.
In Q1 they produced 1111 mt from Mt Pass and in Q2 they produced 1639.
In Q1 ASP was $15.76 from Mt Pass and in Q2 the ASP was $10.30
... they just said there was more LREC in the mix which drops price.
In Q1 cost was about $27 from Mt Pass and in Q2 the ASP was $16.54
... that also gets dropped by LREC some.
I don't know how long the time delay from production to sales is, but the sales volume needs to increase. Making more at lower costs is better, but the sales is the same.
Production was around:
April: 520 mt
May: 700 mt
June: 420 mt
There was increases in May, but they ran into issues with Chlor-alkali and leaching systems. August is still running at reduced production.
That is what a step function IS. It refers to a non-linear increase, as in a stair-step, where the path takes a sudden vertical increase. A step-function has a precise definition:
Step Function: A function that has a graph resembling a staircase.
It is an example of a discontinuous function. As you point out, the rate of production is not a continuous one, but might have dramatic discontinuities.
The Q2 report has the production at Mt Pass as 1639 mt. Considering that they announced April as 520 mt, that is not any great improvement,Yes it is higher than Q1, but it also is not as fast as I hoped for. They might have produced:
April: 520 mt
May: 545 mt
June: 575 mt
At Q1 they said they were still targeting full operations by December, although that was a difficult target. With under 600 mt produced in June, it sounds impossible. We know that the ramp is not a smooth increase, but a step function, and there may be a sudden increase, but it is a disappointing volume produced in Q2.
There was a HUGE amount of interest in the purchase of the 2016 bonds which was assumed to be based on a takeover plan. It is now clear that was some insider trading based on this financing deal. In 2016 there is $230 million due. But the new deal has $150 million to be delivered then, and it has warrants for about 25 million shares. If the purchase price and exercise on those is 2016 at $3 per share, that would be another $75 million, which with the $150 million would almost exactly pay that bond debt.
It was bought at a huge discount. Now it appears there is a high probability of repayment.
We don't know the details on the entire financing deal. We don't know the purchase price of the shares for which warrants are issued. We don't know the equipment or the buyback options. We don't know the lease payments. But it is probably a modified loan, in essence. When we learn the details, we can figure out the final costs.