Dispute Over Ardagh Group’s Restructuring Deal
Deutsche Bank and Carronade Capital, an activist hedge fund, are working to block a $10 billion restructuring plan that was reached between Irish billionaire Paul Coulson and a majority of Ardagh Group’s bondholders. This plan is intended to help pay shareholders as they exit the financially troubled packaging company.
Alder, based in Luxembourg and recognized as one of the largest producers of glass and metal beverage containers globally, revealed the restructuring agreement back in July after lengthy negotiations with creditors that owe over $10 billion. It has been impacted by rising interest rates and soaring energy costs, in addition to billions in impending debt maturities.
Coulson, a former accountant often referred to as “Cooler” in Ireland, is set to hand over control of Ardagh to a group of bondholders according to the deal’s terms. As part of the arrangement, shareholders are expected to receive $300 million—with over $100 million going to Coulson himself.
However, the plan will also result in the complete write-down of the group’s riskiest $1.7 billion payment-in-kind bonds, which can pay interest in the form of more debt, in exchange for a 7.5% equity stake in the company.
Deutsche Bank and Carronade together hold about 13% of the debt and are attempting to prevent the restructuring agreement, believing it might unfairly advantage other creditors and shareholders while putting them at a disadvantage.
Those opposing the deal are aiming to bring the matter to court unless a better settlement is reached for the PIK bondholders.
Meanwhile, restructuring officials are optimistic that the deal won’t face delays due to the opposition from the PIK bondholders.
For a $300 million dividend, control is expected to transfer from shareholders to Alder’s unsecured bondholders as part of a debt-for-equity swap. This includes Arini Capital Management, established by former Credit Suisse trader Hamza Remsugel, and Canyon Partners from the U.S.
Bondholders will also introduce $1.5 billion in fresh financing for the group, while a prior loan from Apollo Global Management will be fully settled.
Alder needs consent from a minimum of 90% of all classes of securities to proceed with the transaction. As per an announcement in late September, the group has gained nearly unanimous consent from senior secured and unsecured bondholders but only around 82% from PIK holders.
With a backing of over 75% across all security types, Alder might consider using an in-court restructuring method, like a UK-based scheme of arrangement, to push the deal forward.
Coulson, now 73 years old, has transformed Alder into one of the world’s largest packaging conglomerates through a series of leveraged buyouts, earning recognition as a significant figure in the European junk bond market.
