Irish financier Paul Coulson's Ardagh Group unveiled plans to refinance almost $1.3 billion (€1.2 billion) of debt due in two years' time as the glass and metal containers manufacturer lays the ground for an initial public offering in the coming months.
The company said on Thursday it was launching the sale of $1 billion of senior bonds that will mature in 2025. The proceeds from the offering, as well as $300 million of Ardagh’s existing cash resources, will be used to repay in full $1.26 billion of mainly secured debt that is scheduled to be redeemed in 2019.
The new notes were priced on Thursday evening to carry an interest rate, or coupon, of about 6 per cent..
“Following these transactions, Ardagh’s only debt maturing before 2021 will comprise approximately $265 million of first priority senior secured floating rate notes, due 2019,” it said.
The group said it intends to continue to reduce its debt burden through earnings growth and by using the proceeds of the planned IPO, which may be triggered as early as March and is expected to raise about €270 million through the placement of a 5 per cent stake.
The fact that Ardagh is replacing secured debt with unsecured borrowings prompted Standard & Poor’s to upgrade its rating on the company’s secured notes by one level to BB-. The new rating, however, remains three levels below what is considered investment grade.
Ardagh also said on Thursday that based on unaudited management information, it expects to have seen a marginal decline in revenue in the fourth quarter of 2016 compared to the same period in 2015 on a pro forma basis.
Adjusted earnings before interest, tax, depreciation and amortisation for the fourth quarter is expected to increase by a “mid-single digit percentage” compared with the same period last year, on a pro forma basis.
Last June, Ardagh completed its biggest deal, the $3.4 billion purchase of a beverage cans business from US packaging company Ball Corp and British peer Rexam.
Mr Coulson, who originally took the business private in 2003, has been plotting a return of the group to the market since 2011. However, this has been delayed by market volatility and the group being distracted, at times, by acquisition opportunities, funded by debt. Most recently, it pulled a planned IPO of its metal-containers unit in late 2015.
Having refinanced billions of euros of debt in 2016, taking advantage of low bond yields in global markets, Mr Coulson signalled late last year it would continue to refinance debt this year.