Ardagh has support for deal from 90pc of holders of senior debt

Irish Independent

a day ago

The company needs to get over 90pc consent from all classes in order to implement the deal on a fully consensual basis. However, now the ­level of PIK support has passed 75pc, it could seek to push through the deal through a court restructuring process known as a scheme of arrangement.
Giving the Transition Services Update, the Irish company encouraged all remaining holders of senior debt and of PIK notes to agree to the deal by the 'early bird' deadline of tomorrow.
Under the terms of the proposed restructuring, holders of $4.3bn (€3.7bn) in combined senior unsecured notes and PIK notes will swap their debt for equity.
Secured creditors who do not consent to the deal by today will have their holdings exchanged for new debt at a discounted price of 80c, according to a presentation given by the company to investors. Holders of senior unsecured bonds and of PIK bonds would also lose access to a portion of the allocated equity if they do not sign up.
Consenting holders of senior secured notes who sign up to the deal by the early bird deadline will get new exchange notes at par value.
Last week Bloomberg reported that a small cohort of Ardagh Group creditors were pushing back against the restructuring deal agreed to by the packaging company and most of its debt holders. The news agency quoted unnamed sources as saying that the minority group, which owned PIK bonds, were consulting with the legal firm White & Case.
PIK bonds give the company the option of paying interest in more bonds, or additional debt, instead of cash. The senior unsecured bondholders are due to own 92.5pc of the equity once the deal goes through, while the PIK holders will get the remaining 7.5pc.
The PIK notes are trading for less than 5c on the dollar, while the unsecured bonds, due in August 2027, are indicated at about 45c, according to data compiled by Bloomberg.
The Ardagh restructuring deal involves unsecured creditors taking over control of the business from the current shareholder, Irish businessman Paul Coulson. His investment vehicle, Yeoman Capital, is set to get a $300m pay-off to walk away.
As Mr Coulson currently owns about 36pc of the Ardagh Group, it is expected that he will earn about $108m for the deal.
ADVERTISEMENT
Ardagh, a recyclable metal and glass packaging firm, is one of the largest manufacturers of its type in Europe. It operates 58 metal and glass production facilities in 16 countries, employing about 19,000 people, and had sales of about $9.1bn last year.
Mr Coulson took over Ardagh's predecessor, the Irish Glass Bottle Company based in Dublin, in the late 1990s.
Ardagh has been negotiating with bondholders for months as it attempted to find a way of dealing with debt due to mature next year. Higher interest rates and running costs had weighed heavily on the company's balance sheet, which pushed the Irish businessman into a position where he had to negotiate with creditors to reduce the debt load.
The company has $2.6bn in obligations due next year. Creditors previously rejected a plan to leave Mr Coulson in control of Ardagh Metal Packaging SA, the most profitable arm of the business, which is listed in the US.