Bondholders in Paul Coulson’s Ardagh Group are in talks to take control of its glass business as well as a stake in its metals unit, as negotiations continue for the company to reduce its debt.
Ardagh is negotiating with two sets of bondholders who have formed ad hoc groups to deal with the company over its debt. A group of senior secured noteholders (SSN) and a separate group of senior unsecured noteholders (SUN) are in talks with the firm.
The group, which Irish financier Paul Coulson has built into one of the world’s leading glass and metal packaging businesses over the past quarter of a century, has suggested spinning its shares in the metals packaging business into a new company that would be owned by Ardagh and participating senior unsecured noteholders, it said in a statement on Tuesday.
It is also proposing the exchange of the senior secured debt in full into $1.9 billion (€1.7 billion) of new senior secured debt at Ardagh Group, and $550 million of senior secured debt in the new metals company both maturing in 2030.
Crucially, Ardagh has proposed that participating holders of senior unsecured debt would get all the equity in Ardagh Group, as well as 20 per cent of the notional equity in the new company holding the metals business. That unit “would be incorporated by certain existing shareholders” who would hold 80 per cent of the notional equity of the new company, it added.
While the secured debt holders are not seen taking a significant haircut on their holdings, the unsecured noteholders face about a $1.6 billion haircut in exchange for taking over the glass unit and the stake in the metals unit.
Ardagh Group controls the firm’s glass bottling business in North America, Europe and Africa as well as a 42 per cent stake in Trivium, its food and speciality metal packaging business joint venture with US rival Exal Corporation. Ardagh and a pension fund that owns Exal are exploring a possible sale of that business, The Irish Times reported in July.
The ad hoc group of unsecured noteholders has made a series of counterproposals to the company’s offer. Ardagh said it “continues to engage in constructive discussions with the SUN Group and the SSN Group with a view to agreeing and executing a consensual restructuring transaction”.
Ardagh Group, whose expansion over 25 years was driven by a series of debt-fuelled acquisitions, warned in its annual report last month that there could be “substantial doubt” over its ability to continue as a going concern amid the debt restructuring talks.
Mr Coulson effectively owns 36 per cent of the group.
Ardagh Group had net borrowings of $10.5 billion (€10 billion) at the end of December, equating to 7.6 times its earnings before interest, tax, depreciation and amortisation for 2024. However, the ultimate parent company of the group, ARD Holdings, has an estimated $12.5 billion of net debt.
