Bloomberg reported Molycorp is considering a proposal from senior creditors that would swap some bonds for equity as the rare-earths producer struggles to manage $1.6 billion of debt, according to two people with knowledge of the matter.

Bloomberg sources said Houlihan Lokey and Kramer Levin Naftalis & Frankel, which are advising holders of Molycorp’s $650 million of 10% first lien secured notes maturing in June 2020, submitted the plan in late April and signed non-disclosure agreements; part of the plan includes swapping a portion or all of the notes into equity.

Bloomberg said further failure to repay the convertible notes on time would trigger an early repayment of borrowings under a $400 million credit line provided by Oaktree Capital Management last August.

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