The financing will be comprised of a term loan in the amount of USD$50 million and a lease agreement whereby La Arena S.A. acquires the operating assets of its electrical power subsidiary, Empresa de Energia Yamobamba S.A.C. "Yamobamba Energy", for proceeds of USD$20 million.
The loan will have a one year term and will bear an expected interest rate in the range of 2.5% to 2.75% per annum and the lease will have a three year term and an expected interest rate of 4.50% per annum.
The lease agreement transaction will allow Rio Alto to accelerate the refund of Value Added Tax (IGV) paid of up to USD$3.6M (18% IGV levied on equipment and construction costs) which will be an additional cash inflow to the USD$70 million in financing. The financing has been structured by Credicorp Capital Servicios Financieros S.A. and the funds lent by Banco de Crédito del Perú.
The completion of the financing is subject to the negotiation and execution of definitive agreements and the satisfaction of other customary closing conditions.
Kathryn Johnson, Chief Financial Officer, commented: "We are delighted to have achieved the necessary financing to continue growing our company in Peru while deepening ties with local Peruvian financial institutions. I thank Credicorp Capital and Banco de Crédito del Perú for the confidence and support they have shown Rio Alto through the years."
