Molycorp Inc (NYSE:MCP) announced that it has plans to use the 30-day grace period for the repayment of a $3.36 million semiannual interest extended from its due date this earlier this week.
The company has been struggling to meet the payment deadlines, but it plans to use the extended grace period to study its options. This will allow Molycorp to figure out how it can restructure its debt. Restructuring will allow the firm to determine how best to source the funding to repay the loan.
The element mining and processing firm is situated in Greenwood Village, Colorado. It recently made an announcement that the decisions made in the grace period will not affect the company’s operations. It will also not influence funding from cross-default provisions from other unpaid debts before the end of the grace period.
Earlier in the beginning of this month, a report from the Wall Street Journal reported that the company is the only rare earth and element mining company that had plans to file for bankruptcy in the U.S. The plans to pursue the bankruptcy application would reduce the company’s debt to about $1.7 billion.
The plans were sudden for the company, and they market the entry of a desperate situation for Molycorp. The company had previously been operating on the fears that its rare earth element mines were running low, meaning production and performance would be affected in the near future. The projections involving a $6 million market capitalizations took place in 2011.
The produce from the company makes elements used in the making of electronic devices. Since the projections were made, China eased the restrictions on the exportation of rare earth elements. The result was an oversupplied market thus a decrease in the prices. Molycorp Inc (NYSE:MCP) has since then suffered from the aftermath. The company has registered annual losses over a period of three consecutive years. The company has thus been struggling to get back on its feet, but the massive debts and low productivity have been pulling it back.
