- Neo Performance is the former Molycorp
- Offering, including greenshoe, could raise $272 mln
- All proceeds go to Oaktree Capital
Neo Performance Materials, an advanced-materials supplier that emerged from bankruptcy in 2016, priced its recently filed initial public offering in Canada.
The Toronto company is looking to raise $236 million (C$300 million) by selling common shares at C$19 to C$22 per unit, the updated prospectus shows.
The issue’s greenshoe option, if fully exercised, would bring the total raised to $272 million (C$345 million).
All proceeds from the IPO will go to Neo Performance’s majority owner, Los Angeles distressed investor Oaktree Capital Management. When the offering closes, Oaktree’s interest will be reduced to 58.6 percent, or 53.1 percent if the entire target is raised, the prospectus shows.
This suggests Oaktree will likely reclaim a sizeable portion of the investment it made when it took control of Neo Performance a little over a year ago.
Neo Performance rose from the ashes of the failed Molycorp, a once prosperous listed miner of rare-earth materials. Molycorp, formerly backed by Resource Capital Funds, filed for Chapter 11 bankruptcy in June 2015. Roughly a year later, it emerged in private form with a new name and capital structure.
At that point Oaktree, reportedly Molycorp’s biggest creditor, became the new entity’s owner. The price paid is not known, but Molycorp carried $1.7 billion in debt when it filed for Chapter 11.
Oaktree investment pros Nicholas Basso, Brook Hinchman, Aman Kumar, Edgar Lee and Emily Stephens hold seats on the board.
Today, Neo Performance continues to produce rare-earth- and rare-metal-based functional materials used mostly in tech sectors, such as aerospace, clean energy, electric cars and electronics. The company also sees a growing market opportunity in artificial-intelligence applications.
Neo Performance sells globally from operations in 10 countries, including China, Germany, Japan, the United Kingdom and the United States. It reported $404 million of revenue for the year ended June 30, 2017. Performance was weaker in the two preceding years due to depressed commodity prices,
Neo Performance will list on the Toronto Stock Exchange. The underwriters are Scotia Capital, RBC Dominion Securities, Cormark Securities, CIBC World Markets, Barclays Capital Canada, Canaccord Genuity, GMP Securities and Raymond James.
Bloomberg reported that the company also is exploring a sale as part of a dual-track process.
Neo Performance is one of 14 Canadian private-equity- or venture-backed companies to announce or complete a public sale since January. Companies involved in some of the biggest IPOs closed, such as Canada Goose and Jamieson Wellness, were also held by U.S. investors.
PE- and VC-backed offerings have played a major role in a revived Canadian IPO market in 2017. PwC Canada last month reported C$3.3 billion raised from new domestic issues in the first nine months, compared with less than C$2 million in the year-earlier period.
A front-end loader is used to move material inside the open pit at Molycorp’s Mountain Pass Rare Earth facility in Mountain Pass, California, on June 29, 2015. Photo courtesy Reuters/David Becker