Mineweb reported that Standard & Poor’s has lowered its corporate credit rating for Molycorp Inc. (NYSE:MCP) from CCC+ to CCC with a negative outlook. The firm does not anticipate upgrading the company over the next year.
As quoted in the market news:
‘The downgrade reflects our view of the company’s deteriorating liquidity position,’ said S&P in making its second downgrade of Molycorp in less than a year.
‘The negative outlook reflects our view that it is unlikely to have cash on hand to meet operational and working capital needs, interest, and capital spending over the next year,’ the ratings agency observed.
‘In our view, the company’s capital structure is unsustainable, and we believe that the company’s sources of liquidity may not be sufficient to cover operational and working capital needs, interest, and capital spending over the next year,’ said Standard & Poor’s Credit Analyst David Kuntz. ‘We believe it is likely to conduct some form of capital restructuring during that time, which could include a distressed debt exchange.’
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