BANKRUPTCY PLAYS

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MCP S&P rating cut to D from CCC+

http://www.streetinsider.com/Credit+Ratings/UPDATE%3A+S%26P+Downgrades+Molycorp+(MCP)+to+D%3B+Considers+Default+Move+to+Occurred/10617368.html

06/02/2015 12:41 UPDATE: S&P Downgrades Molycorp (MCP) to 'D'; Considers Default Move to Occurred.

Updated - June 2, 2015 12:47 PM EDT)

Standard & Poor's Ratings Services said today it lowered its corporate credit rating on Molycorp Inc. (NYSE: MCP) to 'D' from 'CCC+'. We also lowered our senior secured and senior unsecured issue-level ratings on the company to 'D' from 'CCC+' and 'CCC-', respectively. The recovery rating on the company's senior secured debt is '4', which indicates our expectation for recovery at the lower half of the average (30% to 50%) recovery range. The recovery rating on the senior unsecured obligations is '6', which indicates our expectation for negligible (0% to 10%) recovery.

We lowered the ratings on Molycorp Inc. after the company elected not to pay the $32.5 million interest payment on its 10% senior secured notes due 2020. A payment default has not occurred under the indenture governing the notes, which provide a 30-day grace period. However, we consider a default to have occurred because we do not expect a payment to be made within the stated grace period given the company's heavy debt burden, which we view to be unsustainable. In our opinion, the company has insufficient liquidity to operate beyond the next few months as it works with creditors to restructure its balance sheet. Cash and investments totaled approximately $134 million on March 31, 2015.