Monday, November 12, 2012

Molycorp Looks Set to Open at New All-time Low (MCP)

"It began as a twisted dream..."
Nah, it was a Goldman deal.*
In late pre-market action the stock is trading at $7.38 which eclipses Friday's new all-time low of $7.42 which...
The stock was down 13.5% on Friday and I think it might be time to revisit the capital structure to see if there are any instruments that attract. Probably not the shares quite yet or the notes that were floated in August:
...MS is, along with Credit Suisse, joint bookrunner for the notes offering and MS is sole bookrunner for the stock.
From the book:
...The Borrowed Shares Offering is contingent upon the successful completion of the Notes Offering, and the Notes Offering is contingent upon the successful completion of the Borrowed Shares Offering. However, the Primary Shares Offering is not contingent upon the successful completion of either the Notes Offering or the Borrowed Shares Offering, and the Notes Offering and the Borrowed Shares Offering are not contingent upon the successful completion of the Primary Shares Offering.... 
Got that?
Here's the story through Friday, via Bloomberg:
Molycorp Probed by SEC for Accuracy of Its Disclosures
Molycorp Inc. (MCP), the owner of the largest rare-earth deposit outside of China, said it’s being investigated by the U.S. Securities and Exchange Commission over the accuracy of the company’s public disclosures.
The SEC notified the company in August that it’s probing the disclosures “among other things,” Greenwood Village, Colorado-based Molycorp said today in a filing. Molycorp is cooperating with the SEC and can’t predict how long the investigation will take, it said in the filing.

olycorp has tumbled 67 percent this year after a slump in prices for rare earths, a group of 17 chemically similar elements used in wind turbines and hybrid cars. Users have sought alternative raw materials and used stockpiles after a surge in prices in 2010 through 2011 that was spurred by a curb in supplies from China, the world’s biggest producer.

The company, which sold shares in a July 2010 initial public offering, is increasing output at its Mountain Pass mine in California. It also sells magnetic raw materials and other rare-earth products from plants it acquired with its June takeover of Canada’s Neo Material Technologies Inc. for C$1.3 billion ($1.3 billion).
Molycorp dropped 14 percent, the most in three months, to $7.50 at the close in New York....MORE

*To be completely clear about this, GS is no longer in the stock and hasn't been since they tidied up, packaged and sold the deal to the  private equity guys, pre-IPO.

Which of course reminds me of a prior MCP post:
...To paraphrase one of my all-time favorite Barron's headlines:

Better Get The Leg Irons Boys.
These Ain't Regular Criminals,
These is Private Equity.
(the original miscreants were 'Stockbrokers')
We have fond memories of MCP on both the upswing and the down and might have a hundred posts on this one, use the search blog box if interested.
See also:
"The Money Man Behind America’s Rare Earth Minerals" (MCP)

UPDATED-Rare Earth: "Molycorp Looks Like One Of The Greatest Private Equity Deals Ever" (MCP)