Total borrowings at financier Paul Coulson's Ardagh Group rose to €8 billion at the end of June as the glass and metals packaging giant completed its biggest ever deal.
On June 30th, Ardagh finalised the $3.42 billion (€3bn) purchase of 22 beverage can-making plants in Europe, the US and Brazil from US packaging group Ball Corp and UK peer Rexam. Ball and Rexam decided to sell the assets to receive regulatory approval for their own merger.
The deal, making Ardagh the world’s third largest drinks-can maker, marked the latest stage in the transformation of a once small, Dublin-based, glass bottle maker into one of the largest metal and glass packaging groups globally in less than two decades.
Ardagh said in a report to its bondholders on Thursday that its revenues for the first six months of the year were virtually unchanged at €2.5 billion, while earnings before interest, tax, depreciation and amortisation rose to €473 million from €453 million from the same period in 2015.
Ebitda of €1.4bn
No sales or earnings arose from the acquisition in the reporting period.
Mr Coulson, the group’s chairman of 18 years, said the newly acquired business is “is performing in accordance with our expectations” and that Ardagh is targeting ebitda of €1.4 billion for 2017.
The group had €819 million of cash and available liquidity at the end of June, leaving its net debt at €7.37 billion. The group’s pro-forma net debt stood at 5.7 times’ ebitda at the end of June, according to the report, and it plans to reduce the ratio to about five by the year end.
Mr Coulson said in April that the company has revived plans to raise hundreds of millions of euros of equity after the Ball-Rexam deal to help deleverage the business more quickly. The Luxembourg-based company is exploring selling shares to private investors or in the public markets to lower its debt burden, he said at the time.
Mr Coulson declined to give a specific update on the plans when asked by analysts on Thursday.
“We are working on a range of options in relation to the whole capital structure,” Mr Coulson said. “We have nothing concrete to report at this point.”
Bonds to redeem
When asked about more than €2 billion of high-cost bonds the group has the right to redeem and potentially refinance at lower rates, he said that in looking at its overall capital structure, the company keeps an eye on bonds that it can call in. “But we haven’t formed any conclusions at this point,” he said.
In May, the group raised a net €3.9 billion by selling euro and dollar-denominated bonds to finance the purchase of the Ball-Rexam metal drinks-can business and repay about €1.37 billion of expensive debt.
