The value of Ardagh Group bonds experienced a downturn earlier in the week following the revelation that the glass and metal packaging conglomerate, consolidated by Irish financier Paul Coulson, brought in counsels for advice on dealing with its over $11 billion (€10.2 billion) debt accumulation.
In order to advise on its debt situation, the conglomerate engaged the services of US legal firm, Kirkland & Ellis, and investment bank Houlihan Lokey. Additionally, some groups of creditors have retained the services of Gibson Dunne & Crutcher and Milbank, as supplementary advisory sources, according to Bloomberg. However, Ardagh Group’s spokesperson refrained from commenting on this matter.
An example of the decline was visible in the bonds dispensed by Ardagh Group’s Ardagh Packaging Finance unit. These are set to mature in 2026, but fell to 84 cents in euro terms by Friday, down from 87 cents a couple of days earlier.
Ardagh, which originated from the long-defunct glass bottle manufacturing plant situated in Dublin’s Ringsend, has $700 million worth of bonds approaching maturity in April next year, and an additional $2.6 billion set to mature in August 2026. The company holds a cash reserve of approximately $800 million.
During a discussion with bondholders in February as Ardagh revealed a disappointing fourth quarter result, company executives expressed their awareness of forthcoming debt maturities and broke down their ongoing review of the capital structure. The executives refrained from commenting on possible strategies for reducing the debt load but indicated that financial market circumstances had seen growth this year, fuelling expectations of imminent reductions in central bank rates.
During the final quarter of last year, Ardagh’s adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) marked a decrease of 25% year-on-year to $243 million, reflecting a lack of consumer confidence and reduced orders from food and beverage firms looking to decrease their packaging stockpiles.
Mr. Coulson vacated his position as executive chairman towards the end of last year but maintains his seat on the board and effectively controls a 36% share in the group. Ard Finance, the parent company, revealed total borrowings amounting to $11.6 billion at the end of September, according to their most recent report.
Reportedly, Ardagh Group and a Canadian teachers’ fund revisited the possibility of offering their joint-venture specialised food and metal cans business for sale, potentially valuing the enterprise at over $3.5 billion, including debt. This was the second such speculation in a two-year span.
In 2019, Ardagh separated a unit into a collaborative venture with US-based competitor, Exal Corporation. Exal Corporation is a property of the Ontario Teachers’ Pension Plan Board (OTPPB). Together, they established Trivium, of which Ardagh holds 42 per cent ownership.
Late last year, Standard & Poor’s and Fitch independently revised their opinions on Ardagh’s credit reliability, pushing its status further into the non-investment-grade division. This was due to anxieties surrounding the organisation’s earnings forecast and increasing debt refinancing dangers.
Alternative means of generating revenue might see Ardagh disposing of stocks in its beverage can sector, Ardagh Metal Packaging (AMP), listed in New York. AMP was launched publically in 2021 via a reverse takeover of an openly traded cash entity.
Despite shares in AMP seeing a significant decrease of two-thirds on Wall Street following its flotation, Ardagh still retains a notable 76 per cent interest in the business.