Ardagh, the publicly quoted company that closed the Irish Glass Bottle Company in Ringsend, Dublin, this year, is preparing to split the group into two separate entities, offering shareholders an opportunity to exit.
The company intends to demerge its glass container manufacturing businesses in Britain and Italy into a new unquoted company, Ardagh Glass Limited, which will be incorporated in Guernsey.
Ardagh would continue to be listed on the Irish Stock Exchange and would trade as a company with residual glass packaging manufacturing and a potential warehousing operation at the Ringsend site.
Shareholders will be issued preferred ordinary shares in the new company with one new share for every Ardagh share. They can choose to retain their shareholding or realise cash for their investment in the glass business. A cash price of €1.10 per share is being proposed. Ardagh shares have traded as low as 90 cents this year and reached a high of €1.30. The shares ended 2001 at €1.10.
Shareholders will be asked to approve the transaction at an extraordinary general meeting on January 15th, 2003. If they sanction this new structure, it will then require High Court approval. The new arrangements could be in place by the end of February, according to Ardagh chief executive Mr Eddie Kilty.
The demerger will allow the company to raise finance more easily by attracting venture capital investors into the private company, he said. "We have been attempting to make significant acquisitions but have been finding it very difficult to raise cash because of our plc status and the relatively low share price."
Yeoman, the investment holding company owned by Ardagh chairman Mr Paul Coulson, together with the directors and certain senior management have each agreed to retain their interests in Ardagh following the demerger.
The venture capital group HgCapital, which owns 10.6 million shares or 30.9 per cent, has opted to sell the majority of its interests in Ardagh. It will receive a cash payment of around €12 million.
Yeoman will become the largest investor, with its shareholding increasing from 23.3 per cent to around 25 per cent.
The group is attempting to create a warehousing operation at the Ringsend site but is in dispute with the site's owners, Dublin Port, about this change of use. Yesterday the company said legal proceedings to secure the extension of the user clause in the Ringsend site lease was expected to progress to a High Court hearing in the first half of next year.
Mr Kilty said its glass operations were performing well and that this proposal would open up exciting opportunities.
"This development has the potential to unlock shareholder value in our glass operations for those of our shareholders who wish to exit from the glass business, while also providing shareholders with the opportunity to retain their investment in the glass business as an ongoing growth strategy is pursued," he added.
