Ardagh Group has tapped a US corporate turnaround veteran, Mark Porto, to become executive chairman as a group of bondholders took over the packaging giant on Wednesday in restructuring of its former $12.5 billion (€10.8 billion) debt.
The deal has seen Ardagh’s founder and driving force, Irishman Paul Coulson, bow out as a director and major shareholder with a $108 million pay-off.
Mr Coulson had built Ardagh over the past 25 years into an international glass and metal packaging giant, with over $9 billion of annual sales, through a series of debt-fuelled deals.
Legacy equity holders are receiving $300 million in total to go away.
RM Block
Ardagh confirmed in a statement on Wednesday that senior unsecured bondholders, who were owed about $2.4 billion, have swapped their bonds for a 92.5 per cent stake in the business.
The remaining 7.5 per cent has been earmarked for holders of Ardagh’s riskiest bonds, so-called payment-in-kind notes. Some 80 per cent of the holders of the $1.9 billion of PIK notes voted in favour of the deal, essentially writing off about 95 per cent of what they were owed.
They will receive Ardagh shares in exchange. The group has now commenced judicial reorganisation proceeding in Luxembourg, where it is headquartered, to impose the same terms on the holdout PIK investors.
“We are very pleased to have concluded this transformational recapitalisation transaction,” said outgoing chairman Herman Troskie, who will remain a director. “I look forward to working with Mark and our new shareholders to deliver our business plan. The completion of the transaction allows the group and all its key stakeholders to fully focus on the business plan and the future growth of the Ardagh Group.”
Mr Porto spearheaded a turnaround of Oklahoma-based Associated Steel Group between 2018 and 2021, involving a recapitalisation of the business and a quadrupling of operating profits, according to his LinkedIn profile.
Apollo Global Management subsequently installed the executive as chief executive of Phoenix Services, a Pennsylvania-based provider of industrial services to steel mills. He guided the company through a debt restructuring under the protection of the US courts before it re-emerged from bankruptcy in 2023.
Ardagh’s senior secured bondholders have agreed to extend the terms of their bonds to 2030. These creditors and the unsecured bondholders-turned-shareholders have agreed to provide $1.5 billion of fresh capital to the business. A syndicate of bank lenders has also agreed to extend the term of a $500 million loan facility by three years to 2030.
Ardagh’s debt became unsustainable when its earnings were hit after the Covid-19 pandemic by inflation, soaring interest rates and soft consumer demand on both sides of the Atlantic. While the group’s metal containers business has recovered strongly, the glass bottles unit continues to struggle.
