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Molycorp, Inc Common Stock Message Board

votingmachine 68 posts  |  Last Activity: Jul 7, 2015 12:07 AM Member since: May 12, 2004
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  • Reply to

    Something is cooking!

    by oberoir2002 May 8, 2015 11:13 AM
    votingmachine votingmachine May 8, 2015 3:16 PM Flag

    The numbers come from the quarterly report. They are just facts. Look them up.

  • Reply to

    Something is cooking!

    by oberoir2002 May 8, 2015 11:13 AM
    votingmachine votingmachine May 8, 2015 11:32 AM Flag

    That plan would at least offer the bondholders a slight chance at a return. I don't know why they would want ownership of equity that is tied to the idea of running Mt Pass as an expensive source of small quantities of LREC.

  • Reply to

    Something is cooking!

    by oberoir2002 May 8, 2015 11:13 AM
    votingmachine votingmachine May 8, 2015 11:29 AM Flag

    Because of the restructuring of debt. Restructuring is code for "we only pay this".

    Here is the current "big" debt from the current 10Q:
    $195.4 million June 2016, 3.25%
    $339.9 million Sept 2017, 6.00%
    $144.8 million Feb 2018 5.5%
    $101.2 million Sept 2019, 12% (Oaktree)
    $130.1 million Sept 2019, 12% (Oaktree collateralized)
    $639.3 million June 2020, 10%
    $11 million, other stuff.

    Call it $1.6 BILLION of debt. Say they can swap that for equity valued at $800 million. They do that by a reverse split, that raises the share price, while keeping 700 million shares authorized (with 10:1, only 25 million out).

    That wipes out debt. It beats p shareholders, but they might own one fifth of a going concern, rather than 100% of a non-going concern.

    Then shut down Mt Pass and sell magnets to Siemens using cheap Chinese RE's. Tell the US military to jump in a lake, or pay some freaking money.

  • votingmachine votingmachine May 8, 2015 9:21 AM Flag

    NO!

    They lose money every quarter, whether or not they had interest expenses on top of that. If they had positive cash flow insufficient to service the debt, that would be a problem you can solve by manipulating debt terms and schedules. You can't pay debt in any way while continuously losing money.

    The debt holders have a point. 3 months ago, they were owed money by a company with $214 million in the bank. Today they are owed money by a company with $134 million in the bank. Next quarter they will be owed money by a company with $75 (optimistically) in the bank. If I had a "soft" covenant to trigger, I would demand immediate repayment. At least I would claim a bit of the spare change sitting in the bank.

    If there was ANY kind of positive cash flow, then it would be a bad loan, that you can work out terms on.

    Here's the ballpark result again:

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

    Sure paying interest hurts. And if the Ops loss was a $10 million profit, it would be possible to say that limited debt restructuring, and limited company growth would be make it work.

    I don't know the count ... this is the 11th straight quarterly loss in a row, IIRC. So next quarter will be 3 straight years of a firehose pumping cash down the drain.

    A while back CK (the long name CEO) was promising cash flow positive, before interest. But they are no longer willing to go out on that limb. I can't agree that you can blame the problems on the interest.

  • votingmachine votingmachine May 8, 2015 8:58 AM Flag

    I was glad they finally broke out the inter segment revenues. Why they always made that so hidden was beyond me.

    Mt Pass sales were terrible. And the majority was just sold internally. Every quarter it is producing #$%$ volumes at #$%$ prices. They targeted 5000 mt per quarter of purified REO's at very low prices. And now they are able to produce barely anything, and LREC at that, at high prices.

    It isn't rocket science. It is simple chemistry. At some point we all have to conclude that they built a completely defective purification plant. I don't know how, but that has to be the assumption when it just won't run. At one point they were claiming a decent run rate, but that was apparently a mirage.

    If they get to volumes with LREC, it not only is not what they intended that plant for, it will still lose money. And the losses at Mt Pass are what are sinking the company financially.

  • votingmachine votingmachine May 8, 2015 8:38 AM Flag

    There won't be a reverse split until there is a shareholder vote to authorize it, at the Annual meeting June 25th. I believe that Delaware laws require that for corporations with Delaware as a state home. The reverse split is to be on the issues voted on.

    The reverse split is likely to be much later than that vote. The authorization is for a year, and the company can pick that timing. The stock price relative to the de-listing price is the key that will drive that, and the deadlines after extensions.

    But it won't be before the shareholder vote, counted on June 25th. Everyone else knows that.

  • 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.

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