MARCH 4 AUCTION SET FOR BANKRUPT MOLYCORP INC.
Green wood Village-based Molycorp Inc. won court permission to put itself up for auction in March, even as bondholders complain that Oaktree Capital Management is using an unfair advantage to try to take over the rare- earth mining company.
Molycorp filed for bankruptcy in June after rare- earth prices dropped, making its California mine unprofitable. The company’s processing division, which sells rare earths from lower- cost mines in China, remains profitable. Rare earths are elements used in devices including magnets for electric cars and wind turbines.
After about two months in mediation with creditors, Molycorp resolved disputes over auction rules that had threatened a sale. Proceeds from an auction would go toward repaying more than $ 500 million that Oaktree is seeking and more than $ 1.4 billion senior and junior bondholders say they’re owed.
The auction is scheduled for March 4, Molycorp attorney Lisa Laukitis of the Jones Day law firm said Friday in Wilmington, Del., federal court. Senior bondholders will be allowed put up debt instead of cash, a practice in bankruptcy auctions known as credit bidding.
Left unresolved are bondholder complaints that Oaktree’s claims are inflated and don’t deserve to be honored before lower- ranking debts. That battle might not be resolved until after the auction, when Molycorp asks the court to approve its reorganization plan.