Article/Intelligence
Ardagh Group SA Announces TSA to Equitize $4.2B of Debt, Push Debt Maturities to 2030; Equity to Go to Unsecured Noteholders, While Secured Noteholders to Exchange Into New Notes Due 2030
- Ardagh Group announced a debt restructuring that has the support of a majority of noteholders as well as its controlling equityholder, Paul Coulson, which will equitize approximately $4.2 billion of debt and extend its bond maturities to 2030.
- The transaction would hand 92.5% of the equity of Ardagh Group to unsecured noteholders, while secured noteholders would exchange into new notes due 2030 at par.
- A $1.5 billion new-money first lien term loan would fund repayment of the €790 million ($926 million at second-quarter foreign exchange rates) Apollo pari-plus term loan, a $300 million payment to a Coulson-controlled entity to acquire all existing equity of Ardagh Group and put nearly $300 million of cash on the company’s balance sheet.
Ardagh Group SA today announced that the company and its various stakeholders had agreed on terms of a debt restructuring. The company said the transaction is supported by creditors representing about 75% of its senior secured notes, over 90% of its senior unsecured notes and its controlling equityholder, Paul Coulson.
The deal follows months of negotiations between the company and two ad hoc groups of noteholders, which Octus most recently analyzed HERE. The agreed to deal is simpler than some of the initial proposals, one of which contemplated transferring Ardagh’s 76% equity ownership of Ardagh Metal Packaging to a new entity.
The transaction, broadly speaking, will effectuate the following:
- Full equitization of $2.348 billion of senior unsecured notes issued by Ardagh Group SA and $1.828 billion of holdco PIK notes issued by ARD Finance;
- The $2.656 billion of existing senior secured notes would exchange into new senior secured notes due 2030 at par for participating holders;
- A new $1.5 billion first lien term loan funded by various noteholders that will inject new capital into the business, provide funds to pay off the existing Apollo term loan and pay $300 million to Yeoman Capital, the ultimate owner of existing Ardagh Group equity interests.
Ardagh Group unsecured noteholders would receive 92.5% of the equity, and holders of the ARD Finance PIK notes would receive 7.5% of the equity of the reorganized Ardagh Group. There is an early consent premium for holders who join the TSA no later than Aug. 11. For senior secured noteholders to receive par on the exchange notes, the holders must join the TSA no later than Aug. 11. Late participants or nonparticipants will exchange their secured notes at a reduced rate of 80.
Senior unsecured and holdco PIK noteholders also must agree by the same deadline in order to receive their full pro rata share of new Ardagh Group equity. Holders who agree late or parties that do not participate will receive their pro rata share of 70% of the equity allocated to their class, with the other 30% of their equity distributed on a pro rata basis to holders who agree by the deadline. There is a minimum participation threshold of 90% for each of the senior secured notes, the senior unsecured notes and the holdco PIK notes.
Under the transaction, Ardagh Group will purchase Yeoman Capital SA, the entity which ultimately holds the existing equity interest in Ardagh Group, for $300 million.
The new-money first lien term loan will have an enhanced security package “comprising substantially all unencumbered and encumbered assets (including equity interest in Trivium and Glass Africa, preferred and ordinary equity interest at AMP, and other collateral),” according to the company. The exchange senior secured notes would have a second lien claim on the same collateral.
Ardagh Group’s capital structure, pro forma for the restructuring transaction, is shown below. Octus has estimated the change in cash according to the company’s estimates in its presentation.
A table summarizing the treatment of various securities in the capital structure across the various earlier proposals and the final agreed transaction, is shown below:
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