(Bloomberg) -- Bonds and shares in 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. The company’s class B shares sank 31% to 0.2 Peruvian sol as of 12:16 p.m. in New York, the biggest drop since 1998. 

Glencore sold its stake for $20 million to a subsidiary of Integra Capital, which is headed 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 paid $734 million seven years ago for a controlling stake in Volcan that were previously in family ownership. The sale price announced Tuesday is worth just 3% of that initial purchase price.

If the $20 million reported by Glencore is the only consideration it will receive for the stake, the implied price for a mix of its A and B shares would be 0.08 sol, according to Credicorp’s analysts led by Miguel Leiva. 

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 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 2023. 

“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.

--With assistance from Marcelo Rochabrun.

(Updates with share move and details in fifth and sixth paragraphs)

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