Ardagh to repay $440m of borrowings early

Move means company will have no debt maturing before September 2022

Irish financier Paul Coulson's international metal and glass containers company Ardagh Group has moved to repay $440 million (€375 million) of high-cost borrowings ahead of schedule as it continues to focus on reducing the burden of its debt pile.

The company said on Monday that it would redeem the bonds, which carry a 6 per cent coupon and are due to mature in 2021, at the end of July.

The move means that Ardagh would have no debt maturing before September 2022, giving it some headroom as debt markets navigate the end of a decade of easy money from central banks globally, which may lead to periods of market volatility.

Ardagh has moved to refinance billions of euro of debt over the past 2½ years, which has served to push the average interest rate on its $8.5 billion total borrowings to below 5 per cent from 7 per cent.

In the past eighteen months, the company – which traces its roots to the former Irish Glass Bottle Company, in which Mr Coulson bought an initial stake in 1998 – has applied $1.2 billion of cash generated from operations, the proceeds of its initial public offering (IPO) last year and "available liquidity" to repay fixed-term debt.

Debt mountain

Ardagh said on Monday that it remained focused on lowering the burden of its debt mountain over the “seasonally more cash-generative second half of 2018”.

The company had $493 million of cash and access to money from a $850 million debt facility at the end of March. It is expected that the $440 million bond redemption will be financed by both cash and drawing down on the banking facility.

Shares in Ardagh have fallen by 13 per cent since the company’s IPO and New York flotation in March last year, in which the company raised $350 million through the sale of an 8 per cent stake to market investors.

The group, whose customers include Heineken, L'Oréal and John West, scaled back its 2017 earnings forecasts late last year amid weakness in the US beer market and unfavourable movements in the foreign exchange markets.

Some 92 per cent of Ardagh is held by a holding company, whose investors include chairman and chief executive Mr Coulson, managers and high-net-worth individuals. However, the group outlined plans in February to “materially” increase the amount of tradable stock by giving investors in the unlisted holding company direct stock in the publicly-quoted business.

Mr Coulson has said he has no interest in sell off any of his 33 per cent stake in the company.

In January, Ardagh decided to close a US glass bottle site it had acquired four years ago as part of its $1.7 billion purchase of Verallia North America from French group Saint-Gobain.

Joe Brennan

Joe Brennan

Joe Brennan is Markets Correspondent of The Irish Times