GREENWOOD VILLAGE, Colo.--(BUSINESS WIRE)--Molycorp, Inc. (NYSE: MCP), the Western hemisphere's only producer of rare earth oxides, today announced that it has priced a $180 million offering of 5.50% mandatory convertible preferred stock by the Company. The mandatory convertible preferred stock offering consists of 1,800,000 shares of preferred stock with a liquidation preference of $100 per share. The Company has granted the underwriters a 30-day option to purchase up to an additional 270,000 shares of preferred stock to cover over-allotments, if any. The mandatory convertible preferred stock offering is expected to close on February 16, 2011, subject to customary closing conditions.
Unless converted earlier at the option of a holder, the mandatory convertible preferred stock will convert automatically into a variable number of shares of Molycorp common stock on March 1, 2014. The mandatory convertible preferred stock will pay cumulative dividends at a rate of 5.50% per annum on the liquidation preference of $100 per share, if declared by the board, payable quarterly in arrears in cash or, subject to certain limitations, in shares of common stock or in any combination of cash and common stock.
The Company also announced that it has priced the secondary offering of 13,500,000 shares of common stock by its selling stockholders at a price per share of $50.00. The selling stockholders have granted the underwriters a 30-day option to purchase up to an additional 2,025,000 shares of common stock to cover over-allotments, if any. The secondary common stock offering is expected to close on February 16, 2011, subject to customary closing conditions.
Molycorp expects to use the net proceeds from the mandatory convertible preferred stock offering to fund its original Phase 1 production capacity plan as well as its Phase 2 expansion plan that is expected to give Molycorp the ability to produce at an annual rate of up to approximately 40,000 metric tons of rare earth oxide (REO) per year at its Mountain Pass, California Rare Earth Facility by the end of 2013. The Company will not receive any proceeds from the sale of common stock in the secondary offering.
J.P. Morgan Securities LLC and Morgan Stanley & Co. Incorporated will act as joint book-running managers for the offerings. Each of the offerings will be made only by means of a prospectus. When available, copies of the prospectus relating to each of the offerings may be obtained from J.P. Morgan Securities LLC, c/o Broadridge Financial Solutions, 1155 Long Island Avenue, Edgewood, New York 11717; or from Morgan Stanley & Co. Incorporated, Attention: Prospectus Department, 180 Varick Street, 2nd Floor, New York, NY 10014 (1-866-718-1649, email address: prospectus@morganstanley.com).
This press release shall not constitute a solicitation of an offer to buy, nor shall there be any sale of these securities in any state in which such offer, solicitation, or sale would be unlawful prior to the registration or qualification under the securities laws of any such state.
About Molycorp
Colorado-based Molycorp, Inc. is the only REO producer in the Western Hemisphere and currently produces approximately 3,000 metric tons of commercial rare earth materials per year. Following the execution of Molycorp's "mine-to-magnets" strategy and the expected 2012 completion of Phase 1 of its modernization and expansion efforts at its Mountain Pass, California processing facility, Molycorp expects to produce at a rate of approximately 19,050 metric tons of REO equivalent per year. The Company expects to achieve an annual production capacity by the end of 2013 of approximately 40,000 metric tons of REO equivalent per year after the completion of Phase 2. Molycorp intends to provide to the market a range of rare earth products, including high-purity oxides, metals, alloys, and permanent magnets.
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This press release contains forward-looking statements that represent the Company's beliefs, projections and predictions about future events or its future performance. You can identify forward-looking statements by terminology such as "may," "will," "would," "could," "should," "expect," "intend," "plan," "anticipate," "believe," "estimate," "predict," "potential," "continue" or the negative of these terms or other similar expressions or phrases. These forward-looking statements are necessarily subjective and involve known and unknown risks, uncertainties and other important factors that could cause the Company's actual results, performance or achievements or industry results to differ materially from any future results, performance or achievement described in or implied by such statements. Factors that may cause actual results to differ materially from expected results described in forward-looking statements include, but are not limited to: the Company's ability to secure sufficient capital to implement its business plans; the Company's ability to complete its Phase 1 modernization and expansion efforts and Phase 2 expansion efforts and reach planned production rates for REOs and other planned downstream products; uncertainties associated with the Company's reserve estimates and non-reserve deposit information; uncertainties regarding global supply and demand for rare earth materials; the Company's ability to maintain appropriate relations with unions and employees; the Company's ability to successfully implement its "mine-to-magnets" strategy; environmental laws, regulations and permits affecting the Company's business, directly and indirectly, including, among others, those relating to mine reclamation and restoration, climate change, emissions to the air and water and human exposure to hazardous substances used, released or disposed of by the Company; uncertainties associated with unanticipated geological conditions related to mining; and other risks discussed in the Company's filings with the U.S. Securities and Exchange Commission, including the Company's Quarterly Report on Form 10-Q for the period ended September 30, 2010, which filings are available from the SEC.
Any forward-looking statement you read in this press release reflects the Company's current views with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to the Company's operations, operating results, growth strategy and liquidity. You should not place undue reliance on these forward-looking statements because such statements speak only as to the date when made. The Company assumes no obligation to publicly update or revise these forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future, except as otherwise required by applicable law.