"Molycorp Files for Bankruptcy Protection" $MCP $MCPIQ

Filed in Delaware yesterday. The WSJ story:

Molycorp wasn’t alone in betting on growth. Mining giants such as Rio Tinto Group and BHP Billiton Ltd. invested in mines and deals, “thinking that it didn’t matter how much you produced, you could always dump it in China,” said Paul Gait an analyst with Sanford C. Bernstein & Co. “That wasn’t supposed to change until 2020-2025, and instead the hard landing is happening now.”

There's a restructuring support agreement, and creditors want to keep pouring money into this thing to try to get it going, so the bankruptcy could be relatively quick.

Haven't seen the actual term sheet, but here is the company announcement of the deal:

"As part of today’s filings, the Company filed a restructuring plan term sheet that broadly outlines the terms of the plan of reorganization that the Company expects to pursue. The plan term sheet provides for the discharge of the Company’s more than $700 million in unsecured notes. The plan term sheet further calls for holders of the Debtors’ $650 million in 10% senior secured notes to have their debt exchanged for a majority equity stake in reorganized Molycorp."

The DIP loan looks very expensive - 7% coupon and 12% OID, so a 20%+ IRR depending on how long the bankruptcy takes.

P.S. I don't think that this deposit can be mined economically, so we may get a chance to short it to zero again with a new public company!