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Commodities & Metals

Molycorp Tests Capital Markets with Large Capital Raise

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By Jon C. Ogg Published
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Money, US, $100 bills

Molycorp Inc. (NYSE: MCP) may have had some serious problems of late, but now the company is raising new capital and the move is adding pressure on the stock as this will be dilutive to earnings. So what if this capital may be needed as a buffer. So what if this proves to the market that Molycorp also can still attract new investment capital.

The rare earth metals leader in the United States plans a sale of $200 million in equity and another $100 million in a note offering. Molycorp plans to use the capital to fund its capital expenditure plans that include its Mountain Pass facility in California.

Molycorp has a market value before the effects of this financing of about $1.2 billion. The $200 million in equity will change that, while the note will go on the other side of its balance sheet. It should be noted that in 2012 its long-term debt grew from less than $200 million in the first part of the year up to $1.19 billion by the end of September.

Molycorp shares are indicated down more than 10% at $7.87 in early bird trading, and the 52-week trading range is $5.75 to $35.79.

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About the Author Jon C. Ogg →

Jon Ogg has been a financial news analyst since 1997. Mr. Ogg set up one of the first audio squawk box services for traders called TTN, which he sold in 2003. He has previously worked as a licensed broker to some of the top U.S. and E.U. financial institutions, managed capital, and has raised private capital at the seed and venture stage. He has lived in Copenhagen, Denmark, as well as New York and Chicago, and he now lives in Houston, Texas. Jon received a Bachelor of Business Administration in finance at University of Houston in 1992. www.247wallst.com.

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