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.

From other sites
Comments (4)
  • Kastanes
    , contributor
    Comments (1287) | 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 (466) | Send Message
     
    Do your own r and d .
    9 Jul 2014, 08:55 PM Reply Like
  • Kastanes
    , contributor
    Comments (1287) | Send Message
     
    Thanks???
    9 Jul 2014, 10:05 PM Reply Like
  • robgra
    , contributor
    Comments (847) | 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
DJIA (DIA) S&P 500 (SPY)
ETF Hub
ETF Screener: Search and filter by asset class, strategy, theme, performance, yield, and much more
ETF Performance: View ETF performance across key asset classes and investing themes
ETF Investing Guide: Learn how to build and manage a well-diversified, low cost ETF portfolio
ETF Selector: An explanation of how to select and use ETFs