Business

Ardagh weighing ‘all options’ to lower debt burden as earnings drop

Group revenue declined to $2.17 billion in the first quarter from $2.27 billion for the same period last year

Irish financier Paul Coulson has turned Ardagh Group into one of the largest glass and metal packaging groups in the world through a series of debt-fuelled acquisitions over the past 25 years. Photograph: Alan Betson/The Irish Times

Joe Brennan
Thu Apr 25 2024 - 17:59

Ardagh Group is looking at “all options” to reduce the burden of its $12.3 billion (€11.5 billion) of net debt, which grew in the first three months of the year as earnings dropped, according to its chairman Herman Troskie.

The net debt mountain of a company at the top of Ardagh’s corporate tree, ARD Finance, increased from $11.9 billion at the end of December.

The debt figure expanded to 9.6 times earnings before interest, tax, depreciation and amortisation (Ebitda) from 8.7 times over months, driven by a decline in earnings.

Ardagh, which traces its roots to the long-since closed glass bottle factory in Dublin’s Ringsend, has been turned by Irish financier Paul Coulson into one of the world’s largest glass and metal container makers over the past 25 years through a series of debt-fuelled acquisitions.

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Mr Coulson stood down as executive chairman late last year but remains on the board and holds an effective 36 per cent stake in the group.

“All options are being considered at this stage” to lower the debt burden, the new chairman told analysts on a call on Thursday. He said the company is still assessing what would be “sustainable” capital structure.

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Group revenue declined to $2.17 billion in the first quarter from $2.27 billion for the same period last year, while Ebitda fell to $254 million from $339, driven by declines in its glass bottle making business as drinks companies cut back orders to run down packaging supplies.

Ardagh’s drink cans business, Ardagh Metal Packaging (AMP), delivered earnings growth in the first quarter. The group is targeting earnings growth for the year as a whole, amid hopes of improving demand, especially in the second half of the year.

Ardagh and its joint venture partner in a food cans business are known to be looking to sell the company, called Trivium.

Ardagh owns 42 per cent. Mr Troskie declined to comment on the potential sale. However, he ruled out the prospect of Ardagh selling down any of its 76 per cent remaining stake in AMP.

Ardagh revealed last week that it had secured at least $1.04 billion of loans from US alternative asset manager Apollo to refinance $790 million of bonds that are due for repayment next year and mop up some of its riskiest debt at a discount to its original value.

The riskiest bonds were trading at as low as 21 cents on the euro last week. Ardagh executives said they have not yet asked Apollo to buy back the bonds, even if taking them out at a discount would lower its debt level.

Joe Brennan

Joe Brennan

Joe Brennan is Markets Correspondent of The Irish Times

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