Ardagh Group’s executive chairman and main shareholder, Paul Coulson, has sold a quarter of his investment in €52.7 million worth of the glass and metal container company’s riskiest bonds, breaking even on notes he snapped up at a discount a year ago.
The Irish businessman took advantage of a rally in the market value of the notes so far this year from their lows in late 2022 to reduce his exposure.
Mr Coulson sold €7 million of so-called toggle bonds, which allow the company to defer cash interest payments if it needs to, at 75.7 per cent of their par value on May 26th, according to filings in recent days with Euronext Dublin. He continues to hold such notes with a €13 million nominal principal amount.
Meanwhile, Mr Coulson sold $7 million (€6.53 million) of dollar-denominated 2027 toggle bonds between May 25th and 26th at 76.5 per cent of their nominal value. He still owns $28 million of such notes, according to filings.
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The prices he received for the bonds were in line with what he paid to acquire them last June. The discounted rates reflected how bond prices globally have fallen sharply since early last year, as investors bet on the pace of central bank rate hikes to rein in inflation, and reassessed their view about the company’s creditworthiness. Bond prices and yields have an inverse relationship.
Mr Coulson made the purchases less than two week after Fitch, one of the world’s leading credit ratings agencies, downgraded its stance on toggle notes to CCC, which is described as a highly speculative investment. The notes were technically issued by ARD Finance, a holding company in the group’s complicated corporate structure.
Still, the notes have rallied off their lows of last December, when they were trading at less than 67 cents on the dollar.
ARD Finance is ultimately responsible for almost $11.6 billion of net borrowings of the wider group, according to the group’s latest financials for the quarter to the end of March. That is the equivalent of 8.1 times its earnings before interest, tax, depreciation and amortisation (ebitda) for the previous 12 months, making it a highly leveraged group at a time of rising interest rates.
However, most of the company’s debt is on fixed rates out to 2026 and Mr Coulson said in February that the group’s main focus over the coming years was to “significantly reduce” its debt burden. This will be mainly by growing earnings and using some of the cash being generated by the business to pay down borrowings.
Mr Coulson has a 36 per cent equity interest in the ultimate holding company behind Ardagh through direct and indirect stakes.
