Paul Coulson places €25m bet on Ardagh’s riskiest bonds

Ardagh Group plans to float on New York Stock Exchange in first half of 2017

Paul Coulson has invested heavily in Ardagh securities. Photographs: The Irish Times/Getty Images

Paul Coulson has invested heavily in Ardagh securities. Photographs: The Irish Times/Getty Images

 

Financier Paul Coulson has underlined his confidence in Ardagh Group’s ability to pay timely cash dividends on its riskiest class of debt by snapping up about €25 million of the securities in recent months.

Mr Coulson acquired €1 million of Ardagh’s so-called payment-in-kind toggle notes, which allow the glass and metal containers maker to defer cash payments if it needs to, on December 21st, according to regulatory filings.

The move follows on from the previously-unreported acquisition of $25 million (€24 million) of such debt in September by a company called Kelvolda Limited, which is indirectly owned and controlled by Mr Coulson.

The initial purchase occurred as Ardagh was selling $1.72 billion of such debt in September, taking advantage of a window in the market to issue the notes before bond markets were rattled by concerns that central bankers globally were running out of ammunition and ideas to stimulate economies.

Yield

The notes carry annual coupons, or interest rates, of between 6.625 per cent and 7.375 per cent and are due to be repaid in 2023. By contrast, the yield on the State’s 2023 bonds is currently 0.061 per cent, while US Treasury bonds of a similar maturity are yielding 2.36 per cent.

The Ardagh euro- and dollar-denominated bonds were sold to refinance some higher-cost loans and pay a €270 million dividend to shareholders. Mr Coulson was the main beneficiary from the payment to investors, as he owns about 36 per cent of the group.

Mr Coulson has said the group intends to make cash interest payments on the payment-in-kind notes as they fall due, rather than rolling up the interest and adding it to the principal.

The notes were issued by the parent of an operating company that he intends to float on the New York Stock Exchange next year. The coupons will be financed by way of the publicly-quoted operating company paying a quarterly dividend to the parent company, ARD Finance.