Sunday, June 22, 2014

"Moody's downgrades Molycorp" $MCP

Moody's downgrade:

"The downgrade reflects continued weakness in rare earths pricing environment, ongoing negative free cash flows, weak liquidity and high leverage. Although Molycorp has now completed the construction of its Mountain Pass production facility and faces significantly lower capex requirements going forward, the project's cost overruns left the company with absolute debt levels that may be unsustainable in a current price environment.

The company had spent roughly $1.5 billion on the Mountain Pass project, compared to its original estimate of roughly $800 million. Total debt as of March 31, 2014 (as adjusted by Moody's) was $1.4 billion, with interest expense for the preceding twelve months approximating $140 million (as adjusted by Moody's). At the same time, the company's EBITDA and operating cash flows were substantially negative for twelve months ended March 31, 2014, roughly amounting to negative $140 million and $210 million, respectively."

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