SUBSCRIBE

Breaking News on Beverage Technology & Markets

News > Manufacturers

Ardagh on track to complete US IPO in 2015

Post a comment

By Jenny Eagle+

29-Jul-2014
Last updated on 29-Jul-2014 at 15:22 GMT

Ardagh on track to complete US IPO in 2015

Ardagh Group looks set to proceed with its long-awaited stock market launch in the second half of next year, according to Moody’s Investor Service.

The bond credit rating business released an Issuer Comment this month stating ‘Ardagh's Sale of Six Former Anchor Glass Plants Is Credit Positive’ and gave the company a B3 stable speculative grade credit rating.

40% of US glass container market

Martin Chamberlain, lead analyst for Ardagh, at Moody’s, told FoodProductionDaily, following the acquisition of VNA and the divestment of the Anchor Glass plants, the firm’s North America glass division will generate annual revenues of approximately $2bn from 16 glass manufacturing facilities.

He said the company has a strong position in the US, which is what it was trying to achieve and has approximately 40% of the US glass container manufacturing market.

Strategically, the combination of the debt refinancing, the disposal of the six Anchor Glass plants and the acquisition of VNA enhances Ardagh’s ability to complete a planned initial public offering (IPO) in the US in the second half of 2015,” he said.

Because it is unclear when Ardagh would price the IPO, how much it would raise and how the company would use the proceeds, we have not yet factored any positive benefits from the IPO into our rating assessment.”

Ardagh Packaging Group announced it had completed its disposal of six former Anchor Glass plants in the US to Glass Container, an affiliate of KPS Capital Partners in April this year.

The disposal is credit positive for Ardagh because together with related payments and other adjustments it will generate total proceeds of around $490m, which, after costs, the company will apply to the prepayment of debt as part of a partial debt refinancing totalling $3.1bn.

Refinancing total gross debt

The refinancing and reduction of total gross debt will reduce leverage and the group’s interest expenses.

The debt repayment, in combination with pro forma synergies from the acquisition of Veralia North America (VNA) from Compagnie de Saint-Gobain SA (Baa2 stable), will result in a 0.3x decrease in reported gross leverage to 6.5x from 6.8x and lower Moody’s forecasted leverage to 7.0x from 7.4x for 2014.

We are now looking to see how the integration of VNA goes into the whole Ardagh Group, how it beds down and achieves the cost savings it said it would achieve through the acquisition,” added Chamberlain.

By acquiring VNA and its growth in the market and customer base, Ardagh is selling to major customers in the region. It will depend on the market if it moves to achieve IPO.”

The debt refinancing extends the company’s debt maturity profile with the earliest repayment now occurring in 2019, versus 2017.

The lower coupon resulting from the refinancing will save the company around €50m per year in interest costs, which is in addition to the reduction in interest from applying the Anchor disposal proceeds, which equals approximately €25m annually.

After taking early repayment penalties into account, the payback period for the company will be close to 1.3 years.

Subscribe to our FREE newsletter

Get FREE access to authoritative breaking news, videos, podcasts, webinars and white papers. SUBSCRIBE

Post a comment

Comment title *
Your comment *
Your name *
Your email *

We will not publish your email on the site

I agree to Terms and Conditions

These comments have not been moderated. You are encouraged to participate with comments that are relevant to our news stories. You should not post comments that are abusive, threatening, defamatory, misleading or invasive of privacy. For the full terms and conditions for commenting see clause 7 of our Terms and Conditions ‘Participating in Online Communities’. These terms may be updated from time to time, so please read them before posting a comment. Any comment that violates these terms may be removed in its entirety as we do not edit comments. If you wish to complain about a comment please use the "REPORT ABUSE" button or contact the editors.

Related products

Related suppliers

Key Industry Events

 

Access all events listing

Our events, Events from partners...