Volcan Bonds Fall After Glencore Sells Control of Zinc Miner

Published 7 May 2024, 14:15:07.499 GMT
By Vinicius Andrade and Maria Elena Vizcaino

(Bloomberg) -- Bonds of Volcan Cia Minera SAA fell after Swiss commodities giant Glencore Plc announced it sold a
controlling stake in the Peru zinc miner.

Dollar bonds of Volcan fell as much as 5.8 cents on the dollar to 62.7 cents on Tuesday, according to Trace data. Glencore sold its stake for $20 million to a subsidiary of Integra Capital, which is headed up by businessman Jose Luis Manzano.

“With the new set of shareholders, we should see more aggressive negotiations on the debt and the risk for bondholders is to the downside,” said Francisco Schumacher, a strategist at BancTrust & Co. “The incoming shareholder isn’t coming in thinking he’d have to give everything to bondholders because if that was the case, he wouldn’t have gotten in.”

Glencore has also agreed to provide as much as $40 million of financing to cover certain mandatory tender offer obligations, according to a statement Monday.

Prior to the stake sale, frictions between Glencore — which owned 55% of Volcan’s voting stock — and other shareholders had caused uncertainty, resulting in the appointment of new management in last year.

“While it was broadly known that Glencore had initiated a process to sell its holdings in Volcan, the news came as a surprise as Volcan is in advanced talks with its creditors to refinance all of its debt,” Lucror Analytics analyst Josseline Jenssen wrote in a note.

The company postponed a $34.3 million payment related to a $400 million syndicated loan last month, delaying it to June 24 following an agreement with several banks.