Lenders in Volcan’s $400 Million Refinancing

Cleary Gottlieb represented a group of bank lenders in a refinancing of Volcan Compañía Minera S.A.A. (Volcan)’s existing bank debt consisting of a $400 million senior term loan facility.

The refinanced facility closed on July 24, 2024.

A group of 11 banks served as lenders to Volcan in the refinanced facility, including the Bank of Nova Scotia, Banco Santander, Banco Internacional del Peru, Banco Interamericano de Finanzas, Natixis, Banco Latinoamericano de Comercio Exterior, Banco de Credito e Inversiones, Bancaribe Curacao Bank NV, Banco de Credito del Peru, Banco de Occidente (Panamá), and Citibank N.A. – IBF, with Citibank N.A. acting as administrative agent. The refinanced terms included, among other things, an extension of the maturity date to 2029, adjustments to the interest rate and an enhanced covenant package.

The refinanced facility also sets out terms for the refinancing of Volcan’s 4.375% senior notes due 2026 as part of a broader restructuring of the company’s outstanding debt.

As part of the refinancing, the previously unsecured facility will now be secured by a collateral package consisting of substantially all the company’s assets, which are located in Peru and Chile. The bank debt will receive a first lien on all collateral, to be shared pari passu with bondholders when the company’s 2026 senior notes are refinanced.

On August 5, 2024, Volcan launched an exchange offer to exchange its $365 million outstanding 2026 senior notes for new senior secured 8.75% notes due in 2030. The exchange offer is conditioned upon the receipt of consents from holders representing not less than 90% of existing outstanding notes. Volcan’s debt was upgraded by Fitch to CCC+ from CC following the closing of the refinanced facility and is expected to be further increased to B- if the exchange offer is successful.

Volcan is based in Peru and is one of the largest producers of zinc, lead, and silver in the world.