Ardagh structures debt deal but forecasts “slight decline” in revenues

Packaging group Ardagh is set to raise $1.53 billion (€1.1bn) of debt financing to finance the acquisition of Verallia North America (VNA) from its owner, Saint Gobain.

The group will raise $700 million in a term loan, with a further $830 million to be raised in senior notes due 2019 and 2021.

With regards to discussions with the US Federal Trade Commission, the group said that it is currently negotiating a settlement on the basis of proposals made by Ardagh which include: Ardagh divesting (i) six former Anchor Glass manufacturing plants located in Elmira, NY, Henryetta, OK, Jacksonville, FL, Lawrenceburg, IN, Shakopee, MN and Warner Robins, GA, (ii) a mould manufacturing facility in Zanesville, OH, (iii) an engineering and spare parts facility in Streator, IL and (iv) the headquarters of Ardagh Glass in Tampa, FL.

The deal was originally due to close on January 13th, but due to these talks with the FTC it is now expected to close on April 30th, 2014 .

The group also disclosed that it is forecasting a “slight decline” in group revenues for the full year 2013, when compared with 2012. “Excluding currency effects, total group revenues are expected to be in line with 2012,” the company said.

The group’s glass packaging division is expected to report a slight increase in revenues compared with 2012, offset by a “small decline” in its metal packaging division.

Earnings (EBITDA) for 2013 are expected to decline by a mid- single digit percentage compared with 2012, after excluding the effects of currency translation, with the glass packaging division performing slightly ahead, while metal packaging is expected to fall by 19 per cent when compared with 2013, after currency translation effects.

Looking specifcally at the fourth quarter, Ardagh said that it would report a “small decline” on fourth quarter 2012, when revenues reached €1 billion.

Earnings will fall by 10 per cent to approximately €128 million, with about a third of this reduction “due to currency movements and timing effects in the smaller engineering business, which had a record year in 2013”.

With regards to VNA, Ardagh expects that its revenues and earnings will be in lne with 2012 (which were $1.6 billion and $261 million respectively) and VNA’s 2013 Capex will be approximately $110 million.