On Friday, rare-earths miner Molycorp (NYSE: MCP) announced a new follow-on offering of stock and convertible notes -- i.e., debt.
The company is floating 37.5 million shares of common stock and made available a further 5.625 million for purchase by its underwriters through an overallotment option, at $6 per share. Thus, the stock offering alone could potentially yield gross proceeds, before fees, of $258.8 million.
In addition, Molycorp is selling $150 million worth of convertible senior notes, paying 5.5% interest semiannually and due Feb. 1, 2018. The notes are said to be convertible into stock at a strike price of $7.20 per share. Alternatively, the company may elect to pay cash to redeem the notes. Molycorp may call the notes at any time after Feb. 1, 2016, provided its shares have traded for at least 130% of the conversion price for 20 trading days out of the 30-trading day period preceding the call.
Here, too, an overallotment option is available, increasing the potential debt raise to $172.5 million. Both the equity and the debt offerings are scheduled to close on Jan. 30. If successful, the total haul could exceed $430 million for the cash-strapped company. Molycorp says it intends to use the cash "to fund current capital needs for capital expenditures and other cash requirements for 2013."
Molycorp shares reacted positively to the news, rising 13.4% to $8.02.