Commodities & Metals

Molycorp's Share Float Set to Double (MCP)

Molycorp, Inc. (NYSE: MCP) is about to have a lot more shares on the market, with no real benefit to the company at all.  The lock-up expiration was a known event for quite some time.  What was not really known was just how much in new shares were going to be added to the float.  An SEC filing from yesterday

The shares are for up to $796,432,500.00 in shares from selling shareholders.  An additional $172.5 million from the sale of Series A Mandatory Convertible Preferred Stock will be sold by the company.  The total based upon a prior closing price was up to just over $831.05 million.

When Molycorp came public with just over 28.1 million shares at $14.00 in July-2010, it priced under the expected range and then it fell.   That was nearly $400 million raised at the IPO.  The new offering will be 13,500,000 shares.

J.P. Morgan and Morgan Stanley are leading the offering, but the large list of co-managers in the deal includes CIBC, Dahlman Rose, BMO Capital, Knight, Stifel Nicolaus Weisel, Piper Jaffray, and RBS. The underwriters may also purchase up to an additional 2,025,000 shares of common stock to cover over-allotments.

In short, Molycorp’s float is about to double.  What is interesting is that the top 10 registered holders as of September 30, 2010 held over 10 million shares.  That has likely changed now as the data is old and since the shares went through the roof.  Regardless of who holds what, there is about to be a much higher float of stock.  The expected sale in late-January was for up to $500 million as well.

As a reminder, the Molycorp story is still really a late-2011 to 2012 and beyond story.  So far there has been no impact from the expected offering.  Molycorp shares are up 2% at $52.35 this morning and the post-IPO range is $12.10 to $62.80.

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Full Molycorp SEC Filing

JON C. OGG