Ardagh’s Paul Coulson eyes €100m windfall from debt deal

Packaging giant’s parent taking advantage of favourable market conditions

Paul Coulson’s effective stake in the listed Ardagh Group is about 33 per cent.  Photograph: Alan Betson

Paul Coulson’s effective stake in the listed Ardagh Group is about 33 per cent. Photograph: Alan Betson


Ardagh chairman Paul Coulson is positioned to enjoy a €100 million-plus windfall as the metal and glass packaging giant’s ultimate parent group sells a traditionally high-cost bond.

The holding company, ARD Holdings, said on Wednesday that it plans to raise $350 million (€291.4 million) through the issuance of so-called payment-in-kind (PIK) notes that are due to be repaid in 2023. The company can add due interest payments to the principal of the bond over the lifetime of the loan, rather than make regular cash payments.

The deal was announced even as US bond prices wobbled and some high-profile debt investors called an end to a three-decade-old bull market.

ARD Holdings said that it plans to use the $344 million (287 million) net proceeds from the offering to “provide liquidity to its shareholders”. Mr Coulson, who transformed the company into one of the world’s largest packaging groups through acquisition over the past two decades, had a 36 per cent interest in the holding company, through direct and indirect stakes. This would entitle him to the equivalent of more than €100 million.

While market sources said ARD Holdings would most likely resort to special dividends to give cash to shareholders, it could also undertake a share buyback.

The group, whose customers include Heineken, L’Oreal and John West, raised $350 million last March through the initial public offering and New York Stock Market listing of an 8 per cent stake in the operating business, Ardagh Group.

Mr Coulson’s effective stake in the listed company is about 33 per cent. He stepped in as chief executive late last year after Ian Curley resigned.

Total borrowings

Ardagh Group’s total borrowings at the end of September stood at €7 billion, down from €8.142 billion in December 2016. Its debt levels are unaffected by the new bond deal at holding company level.

However, repayments on the PIK notes and $1.56 billion (€1.3 billion) of co-called toggle notes issued in 2016 by another company above the publicly-listed group will ultimately have to be met through cash generated by the operating company. Both the PIK and toggle notes are due to mature in 2023.

Ardagh is currently paying a cash coupon on the toggle notes using dividends received from the operating company.

“Thee intention to issue a PIK note highlights the credit market’s continued support towards Ardagh, and its confidence in Ardagh’s cash generation potential,” said Davy analyst Barry Dixon. “Ardagh has historically proven itself adept at taking advantage of favorable market conditions and operating with a high degree of leverage to maximise shareholder returns.”

Moody’s, the ratings agency, assigned a Caa 2 rating on the PIK notes, eight levels below what it considers to be ‘investment grade’.

The securing of a stock-market listing last year gives Ardagh the option of raising equity at a later date to meeting the redemptions of the PIK and toggle notes.