Dallas, Texas 06/25/2015 (Financialstrend) – The American mining corporation Molycorp Inc (NYSE:MCP) has filed for bankruptcy protection under Chapter 11 of US bankruptcy code today. It also announced that its North American subsidiaries will restructure the debt worth $1.7 billion in its US and Canadian operations.
The Rare Earth Company and Past years
Molycorp Inc (NYSE:MCP) once boasted to be the only global company to be vertically integrated, in the field of rare earth supply. It was one of the world’s leading manufacturers and suppliers of custom engineered rare earths and rare metals. The market of rare earths was dominated by China, which amounted for 90% of the trade in this field. The company specialized in custom engineered products made from superfine metals like niobium, gallium, tantalum, indium, rhenium, and zirconium. It has worked across 25 locations over 10 countries in the world and holds a workforce of 2400 employees.
Since past few years, the company has continuously registered revenue loss. The stock prices have fallen correspondingly with the peak price occurring nearly 4 years ago. Since 2011, the company has not turned any profit.
The Bankruptcy Protection And Restructured Debt
Chapter 11 is a US term for a type of bankruptcy that involves re-organization of debtor’s assets and operation. As Molycorp Inc (NYSE:MCP) filed for bankruptcy protection, it sought to restructure its finances. It has successfully reached a restructuring support agreement that allows the company to have the amount of $225 million available in new financing to support operations until the negotiations with creditors are complete.
This was made possible as the company, along with some of its overseas non-operating subsidiaries, filed voluntary petition in the U.S. Bankruptcy Court in the District of Delaware. The Petition includes 20 affiliated debtors. The hearing for the case has not been set as yet. The company expects to exit chapter 11 with proper financing framework to support the progress in business. The situation, however, does not seem so positive for Molycorp Inc (NYSE:MCP).