Report: Apollo snapping up Molycorp bonds to gain edge in case of default

Apollo Global Management (APO -3%) is adding to its holdings of Molycorp (MCP -8.2%) bonds, positioning the investment firm to control MCP in case it seeks to restructure its $1.5B of debt, Bloomberg reports.

APO bought $8.5M of MCP’s $230M of 3.25% convertible notes due 2016 in the March quarter and has since added to that amount, according to the report; as of March 31, APO held at least 22% of that class of securities.

APO is betting holders of the convertible notes won’t receive a full recovery in a default, putting those lenders in control of a restructuring and in line to take over the company’s equity, the report says.

The attempt at a backdoor takeover puts added pressure on MCP to find a solution to its cash burn or risk being taken over by APO and other bond holders, raising the potential for a dilutive event within weeks.

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Comments (4)
  • Kastanes
    , contributor
    Comments (1289) | Send Message
    Can someone please explain how Apollo could prevent MCP from rolling out the debt? Is that a possible solution to the convertible debt or not.


    Thanks in advance.
    9 Jul 2014, 04:36 PM Reply Like
  • rnn
    , contributor
    Comments (655) | Send Message
    Do your own r and d .
    9 Jul 2014, 08:55 PM Reply Like
  • Kastanes
    , contributor
    Comments (1289) | Send Message
    9 Jul 2014, 10:05 PM Reply Like
  • robgra
    , contributor
    Comments (1170) | Send Message
    Let's see, Apollo is gobbling up the BONDS, while recommending the STOCK as a buy. Guess who gets killed if MCP files for bankruptcy reorganization? Hint: not Apollo...
    10 Jul 2014, 03:58 PM Reply Like
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