Volcan Compania Minera is pursuing a second extension with banks to postpone a USD 34.2m syndicated loan amortization payment, according to a source close to the matter and two sources familiar with the matter. The original due date for the payment was 25 April, and the Peruvian miner reached an agreement with banks on 24 April for a two-month extension, to 24 June.

The USD 400m syndicated loan was signed in December 2021. The first payment was scheduled to kick off a series of quarterly amortizations which total USD 105m in 2024, USD 135m in 2025, and USD 160m in 2026. Volcan also has a USD 365m 4.375% bond maturing in 2026.

The company is also aiming to restructure the 2026 bond, which could be renegotiated alongside the syndicated bank loan “in a holistic manner,” according to the two sources familiar.

“My understanding is that they have a holistic plan for both components of the debt, the loan and the bond,” the first source familiar said. “They’re engaged in negotiations around both but the loan is more urgent. Volcan might do this sequentially — first the loan and then the bonds — but they’re both part of the plan.”

“It seems like Volcan is now aiming to complete the negotiation of the bank loan in June, and afterwards negotiate the bond,” the second source familiar said.

Negotiations regarding a second extension for the syndicated loan payment are pretty advanced, to the point that they’re expected to finish before June, according to the source close.

The company was seeking to restructure the 2026 bonds without a haircut but with a higher coupon, as reported in April.

Volcan has been going through turmoil at the ownership level. Glencore, a Switzerland-based global commodities group and its majority shareholder, announced on 6 May that it entered into a definitive agreement to sell its stake in the company to Transition Metals AG, a subsidiary of Argentine private equity firm Integra Capital. 

As part of the transaction, Transition Metals will pay Glencore USD 20m, and Glencore has agreed to provide a secured credit facility of up to USD 40m.

“I think Glencore is selling at a bad price, considering the sale is happening before the separation of their port and mining businesses,” an analyst at an asset management firm said. “It makes you wonder why they’re rushing the sale at a punishing price.”

Volcan announced that it would rescind a 40% stake in the Chinese-Peruvian joint venture Cosco Shipping Ports Chancay — a USD 1.3bn investment expected to be concluded at the end of 2024 — on 30 May. The company would then use the “liberated” assets to establish a new corporation called Inversiones Portuarias Chancay, a spin-off business unrelated to its mining operations.

The Peruvian miner started looking for extra breathing room regarding its looming debt maturities early in the year, after efforts to improve its cash position through non-core asset sales and offtake prepayment agreements had not been enough to quell the concerns of bondholders and credit agencies, leading to credit downgrades. In February, it hired Houlihan Lokey as financial advisor and Davis Polk & Wardwell as legal advisor ahead of the potential debt renegotiation.

A representative for Volcan did not respond to a request for comment.

The 2026 bond last traded today, 7 May, at 61.02 to yield 36.247%, according to MarketAxess. The notes were trading at 68.5 at the end the 6 May trading day, before Glencore’s announcement of the intention to sell its stake.