Financier Paul Coulson built Ardagh Group into a big force in glass and metal packaging by being one of the most nimble Irish movers in high finance over the past 25 years – funding well-timed acquisitions with even better-timed forays into the high-cost global junk bond markets.
At its peak, Ardagh Group had a market valuation of $6.7 billion (€5.8 billion) four years ago, before it was delisted from the New York Stock Exchange. That put Coulson’s indirect 36 per cent stake at $2.4 billion.
Yet Coulson’s high-wire financing would ultimately catch up with him. The total $12.5 billion of borrowings Ardagh Group was ultimately left carrying became too much to bear as it grappled in recent years with inflation, soaring interest rates and soft consumer demand on both sides of the Atlantic.
It led to a major restructuring – unveiled on Monday after months of tough negotiations with various classes of creditors – that will see a bunch of bondholders take control of the group in a debt-for-equity swap.
[ Paul Coulson faces last stand in battle to retain control of ArdaghOpens in new window ]
Coulson, former and current managers and a small group of investors – believed to run into hundreds – who stayed with the company for more than two decades, after its previous life on the Dublin stock market, will share $300 million (€249 million) of go-away money.
It may be hard to feel sorry for them. It is understood that Ardagh Group’s soon-to-be former shareholders will have shared in excess of $2 billion over the years by the time they exit – between debt-fuelled dividends and share buybacks, a windfall from the sale of the leasehold on its original base in Dublin’s Ringsend just before the 2008 property crash, and the $300 million pay-off.
Coulson, known to friends as the Cooler from his university days, has been the main beneficiary.
The businessman cut his teeth in the world of commerce by restructuring the finances of the Trinity Ball in the early 1970s while at college.
The Dubliner started his career as an accountant with Craig Gardner (now part of PwC) in London.
In 1982 he set up Yeoman International, an aircraft leasing and investment firm, where he executed a deal six years later that he would regret. After Yeoman International forked out £93 million sterling for CLF Holdings, a British leasing company to small businesses, it quickly became apparent that it had bought a dud. Bad debts in a unit of the company soared as the UK economy soured.
Coulson turned on his advisers on the deal, merchant bank SG Warburg. He sued the bank and secured an out-of-court settlement of £35 million.
In targeting a business more than six times the size of Ardagh by value, Coulson set the funding template for what would underpin billions of euro of subsequent deals: leverage
Soon after, the Irish Glass Bottle Company, which traced its roots to 1932, was in his sights.
He bought an initial stake and took over as chairman in 1998. Within a year he started off on a road to transform the sleepy company – by then renamed Ardagh Plc – with a single glass plant in Dublin and its two furnaces through the acquisition of Rockware, then Britain’s largest glass bottle maker, for £247 million.
In targeting a business more than six times the size of Ardagh by value, Coulson set the funding template for what would underpin billions of euro of subsequent deals: leverage.
Some 375 workers at the Irish Glass Bottle plant lost their jobs when Coulson closed the facility in 2002.
The following year, he engineered a deal that would split the group in two. Ardagh Glass, a company he subsequently used to build his glass and drink cans empire, was taken private. The other, South Wharf, remained listed, with one major asset: the leasehold on the 24-acre glass bottle site in Dublin.
South Wharf and its shareholders went on to share two-thirds of the €411 million proceeds from the sale of the site as the property boom neared its peak, in 2006. Almost two decades later, the site is finally under construction.
Ardagh Group’s largest deal was its $3.4 billion purchase in 2016 of a bunch of beverage can manufacturing plants that US packaging group Ball Corp and UK peer Rexam were forced to sell to get competition authorities to allow their merger. Coulson secured a New York listing for that unit, called Ardagh Metal Packaging (AMP), in 2021, leaving Ardagh Group with a 76 per cent stake. He delisted Ardagh Group, the parent company, the same year – as equity markets were prepared to give metal packaging businesses a higher valuation than glass.
AMP, whose sales and earnings have recovered strongly in recent quarters, even as the glass business remains under pressure, became the centre of a major battle in recent months. Originally, Coulson wanted to give bondholders control of the struggling glass business, while he and other legacy investors would retain an 80 per cent stake in AMP.
Talks along those lines broke down in late May. The final accord will see Coulson – who has extensive other assets – hand over 92.5 per cent of the group to senior unsecured creditors, who are owed $2.39 billion, and 7.5. per cent to a group of lower-ranking debt investors, known as payment-in-kind not holders. They are owed $1.98 billion.
Major bondholders that are set to become shareholders include: California-based Franklin Templeton, which is best known from taking a major bet on Irish government bonds at the height of the financial crisis; Wall Street giant JP Morgan; and New York-based Monarch Alternative Capital. The restructuring is expected to be completed by the end of September.
Coulson might have gone down the legal route to assert rights over AMP, as it was a so-called unrestricted subsidiary of Ardagh Group, separated by a holding company that was set up in April 2022. In the end he opted for a consensual arrangement with the $300 million pay-off.
The deal also avoids a change of control at the AMP level within the group, which would have resulted in its own $3.69 billion of bond debt automatically falling due for repayment.
