Irish financier Paul Coulson has agreed to cede entire control of Ardagh Group, the glass bottles and drink cans giant he built up over the past 25 years, to a group of its bondholders in exchange for a share of a $300 million (€257 million) pay-off.
The company at the top of Ardagh Group corporate tree has an estimated $12.5 billion of debt, which became unsustainable after its earnings were hit since the Covid-19 pandemic by inflation, soaring interest rates, and soft consumer demand on both sides of the Atlantic.
Ardagh Group’s customers range from Coca-Cola and Heineken to Swiss group Nestlé. Mr Coulson (73) effectively has a 36 per cent stake in the business, with the rest largely in the hands of management and a group of small investors that date back to Ardagh’s previous existence on the Dublin stock market.
On that basis, he will end up with a €108 million payment to walk away from the business.
RM Block
The major debt restructuring will see senior unsecured bondholders and holders of high-risk payment-in-kind notes swap $4.2 billion of debt for equity in Ardagh Group. The senior unsecured creditors will end up with 92.5 per cent of the equity in the group, and holders of the PIK Notes will hold 7.5 per cent.
[ Meet Paul ‘the Cooler’ Coulson: One of the godfathers of leveraged financeOpens in new window ]
“Ardagh Group is pleased to have achieved this significant milestone in agreeing a comprehensive recapitalisation transaction with its key financial stakeholders,” said group chairman Herman Troskie.
“The transaction will preserve the group’s ownership of its glass and metal packaging businesses and puts in place a sustainable capital structure, with significantly lower leverage and an enhanced maturity profile. Together with the injection of new capital, Ardagh will be well-placed to deliver our business plan in partnership with our future shareholders.”
The bondholders taking control of the business are set to provide $1.5 billion of fresh capital to the business refinance certain debt and fund the $300 million payoff to existing investors.
Mr Coulson entered the glass bottle business in 1998 by buying an initial stake and taking over as chairman of the Irish Glass Bottle Company, which traces its roots back to 1932.
After renaming the company Ardagh, he orchestrated a series of overseas acquisitions, fuelled by high-cost debt raised on the international junk-bond market, that would create one of the world’s largest packaging groups with annual sales of more than $9 billion.
The original bottle-making factory in Ringsend in Dublin was closed in the process, in 2002.
Mr Coulson controls Ardagh through an 18.8 per cent direct stake in its ultimate parent company and a 52.4 per cent interest in a vehicle called Yeoman Capital, which owns 33.9 per cent of the group. He effectively owns 36.6 per cent of the equity.
The $300 million Mr Coulson and the other investors will share is a fraction of Ardagh Group’s market valuation. In 2021, it peaked at almost $6.7 billion. That valued the businessman’s holding at about $2.4 billion.
Ardagh Group was delisted later that year, after it decided to float its drink cans unit, Ardagh Metal Packaging (AMP). Mr Coulson stepped down as chairman of the group in late 2023, but remained a director and its major shareholder.
Still, long-term investors in the group made handsome returns over the years as Ardagh Group distributed hundreds of millions of euros, often funded by the issuance of debt.
While earnings have improved significantly in recent quarters in AMP as customers increasingly favour aluminium cans over glass and plastic packaging, the bottle-making business has remained under pressure.
AMP’s chief executive, Oliver Graham, signalled in April that the business had “turned a corner”, helped by a rebound in demand for energy drinks, sparkling water and health segments.
AMP reported on Thursday that its earnings before interest, tax, depreciation and amortisation (Ebitda) rose 18 per cent in the second quarter to $210 million.
The company upgraded its full-year earnings forecast for a second time and now sees Ebitda rising to $705 million-$725 million from $672 million for 2024. It had started out the year predicting that earnings would fall between $675 million and $695 million.
Ardagh Group executives said on Monday that they still expect the glass business to deliver mid-single-digit percentage earnings growth this year, helped by savings from plant closures in Texas, Washington, and Illinois in the US and Drebkau in eastern Germany. While they are forecasting bottle sales volume growth in Europe and South Africa in the coming years, they said they are not in a position to make such predictions about North America.
