Irish packaging giant Ardagh will have the scope to borrow up to €720 million following a deal with a group of lenders led by Citi and Bank of America Merrill Lynch.
Ardagh, whose customers include L'Oréal and Heineken, said on Friday it had successfully concluded a new five-year credit facility of $850 million (€724 million) with the banking consortium.
It will replace two facilities totalling about €320 million, comprised of one for €150 million and another for $200 million (€170 million).
Ardagh said it reflected the group's increased scale following last year's €3.1 billion purchase of drinks can businesses sold by its rivals Ball and Rexam.
“It will provide funding for working capital and general corporate purposes,” the company said.
Ardagh is understood to be unlikely to draw down any of the cash available under the facility.The group agreed the deal simply to have the money available should the business need it.
Flexibility
Sources explained that stock-market investors like to see companies such as Ardagh have extra financial resources available to them. Ardagh raised $350 million by floating 8 per cent of the business on the New York Stock Exchange in March.
“Equity markets like to see that that flexibility is there,” one said. The packaging group did not draw down any of the €320 million available to it under the facility that the new one is replacing.
Ardagh increased the size of the facility as the company had grown as a result of the Ball-Rexam deal, which turned it into one of the world’s biggest drinks can makers.
That deal increased Ardagh’s debt, which was €6.7 billion at the end of September, the third quarter of the group’s financial year. It has been using money raised from the flotation and from its balance sheet to cut its liabilities.
Ardagh’s statement said that closing the five-year facility further diversified its funding sources and enhanced its capital structure, “following significant refinancing activity earlier this year to materially extend debt maturities and reduce financing costs”.
Citi acted as administrative agent and, jointly with Bank of America Merrill Lynch, as global co-ordinator on the transaction, with Barclays, BNP Paribas, Deutsche Bank, Goldman Sachs, SunTrust Robinson Humphrey and Wells Fargo acting as joint lead arrangers, joined by JP Morgan, Rabobank, ING and HSBC. The banks earn a fee for providing the facility.
Ardagh is a leading producer of metal and glass packaging, supplying most of the world’s leading food, drinks and consumer goods manufacturers.
It operates 109 facilities in 22 countries, employing about 23,500 people and has global sales of about €7.7 billion.
