Creditors of bankrupt rare earths miner Molycorp reach deal
By Tom Hals
Feb 23 (Reuters) - Creditors of Molycorp Inc have reached a deal to divide up the value of the largest U.S. producer of rare earth materials, which should help clear the way for the company to exit bankruptcy.
According to court documents, the deal allows for the sale of the company or a reorganization and ends litigation between the company's unsecured creditors and Molycorp's lender, Oaktree Capital Management.
The unsecured creditors had accused Oaktree of using its position as lender to place an "exorbitantly expensive noose around Molycorp Group's neck" and seize control once the miner had been pushed into bankruptcy.
Molycorp's value swelled in 2011 with a commodities boom and export restrictions on rare earths by China, the world's leading producer of the elements used in smartphones and automobiles.
However, a global economic slowdown and China's easing of export restrictions sent prices for rare earths tumbling. Molycorp filed for bankruptcy in June.
If Molycorp reorganizes, Oaktree Capital Management will own 92.5 percent of the company while junior creditors will own the rest. If Molycorp is sold, Oaktree will receive 92.5 percent of the proceeds, up to a maximum of $513.8 million, with the remainder going to junior creditors.
(Reporting by Tom Hals in Wilmington, Delaware; Editing by Chris Reese)
