Glassmaker Ardagh has acquired bonds in a troubled Canadian glass group in the hope of obtaining a controlling equity position in the restructured company.
Ardagh, in partnership with its 20 per cent shareholder Yeoman International, acquired senior secured bonds with a face value of $32.6 million (#36.5 million) in Consumers International.
Subject to shareholder approval at the annual meeting on May 31st, it will buy a further $53.9 million of bonds, bringing its holding to 50.9 per cent of the total amount outstanding. The full cash consideration will be $31.7 million.
Although Ardagh said it was too early to say whether it would achieve its aim of acquiring a controlling equity stake in the group, it said its majority holding of the senior secured bonds would enable it to play a key role in the reconstruction. It added that any potential downside was more than protected by the underlying value attached to its bond holding.
If the Irish group, which acquired British glass group Rockware for #340 million two years ago, is successful, it could increase its turnover fivefold to #1.5 billion, making it a leading player in the world glass market.
Consumers International is a wholly-owned subsidiary of Consumers Packaging, which is listed on the Toronto Stock Exchange. It is in default on its bonds and has appointed a chief restructuring officer to help turn the company around. It is the third-largest glass manufacturer in North America. Ardagh also released annual results for the year to December 31st, 2000, yesterday showing pretax profits of #12.6 million excluding exceptional items. This compared with #17.2 million in the 78 weeks to December 31st, 1999 or #9.1 million on a like-for-like basis. Turnover rose to #319.8 million from #273.6 million in the previous 18-month period.
The company said its performance was very satisfactory given "the extremely difficult trading environment", with continued pressure on margins and a reduction in the overall British market for glass containers.
Ardagh plans to pay a final dividend of 5.78 cents per share.
