The price of bonds in Ardagh Group fell late this week after it emerged the metal and glass packaging giant, assembled by Irish financier Paul Coulson, has brought in advisers to look at options regarding its $11 billion-plus (€10.2 billion) debt pile.
The group has hired US law firm Kirkland & Ellis and investment bank Houlihan Lokey to advise on the matter, while financial firms Gibson Dunne & Crutcher and Milbank have been retained by certain creditor groups, Bloomberg has reported. A spokesman for Ardagh declined to comment.
Bonds issued by Ardagh Group’s Ardagh Packaging Finance unit that fall due in 2026, for example, fell to 84 cents on the euro for Friday from 87 cents two days earlier.
Ardagh, which traces its roots to the long-since closed glass bottle factory in Dublin’s Ringsend, has $700 million of bonds falling due in April next year, and equivalent of a further $2.6 billion maturing in August 2026. It has about $800 million of cash.
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Ardagh executives told bondholders in February, as the group unveiled a weak set of fourth-quarter results, that it was “very conscious” of debt maturities and had been reviewing its capital structure. They declined to comment on potential levers that could be pulled to ease its debt burden, though they noted that financial market conditions had improved this year, amid expectations of central bank rate cuts.
Ardagh’s adjusted earnings before interest, tax, depreciation and amortisation (ebitda) slid by 25 per cent on the year to $243 million in the fourth quarter last year, amid subdued consumer confidence and as drinks and food companies cut back orders to run down packaging stockpiles.
Mr Coulson stepped down as executive chairman late last year, but remains on the board and holds an effective 36 per cent stake in the group. A holding company at the top of the corporate structure, Ard Finance, had $11.6 billion of total borrowings at the end of September, according to its most recent report.
Ardagh and a Canadian teachers’ fund were reported in January to be exploring for the second time in two years putting their food and speciality metal cans joint venture on the market, in a transaction that could put an enterprise value of more than $3.5 billion on the business, including debt.
Ardagh spun out the unit in 2019 into a joint venture with US-based rival Exal Corporation, which is owned by the Ontario Teachers’ Pension Plan Board (OTPPB), to form Trivium. Ardagh owns 42 per cent of Trivium.
Standard & Poor’s and Fitch each moved late last year to downgrade their views on the creditworthiness of Ardagh deeper into non-investment-grade territory, amid concerns about the group’s earnings outlook and rising debt-refinancing risks.
Other cash-raising options could involve Ardagh selling shares in its New York-listed beverage can business, Ardagh Metal Packaging (AMP), which the group floated in 2021 through a reverse takeover of a publicly quoted cash shell.
Ardagh continues to have a 76 per cent stake in AMP. However, shares in AMP have slumped by two-thirds on Wall Street since the flotation.
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