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Irish entrepreneur Paul Coulson told Alda’s bondholders he would need to pay at least $300 million to leave the packaging giant that shareholders had owed debts they built through decades of acquisitions.
Based in Luxembourg and produces glass bottles and metal cans at facilities spanning Europe, the US and Africa, the Aldag Group is at the heart of the controversial restructuring negotiations that more than $10 billion in debt has risen in an era of cheap money and low interest rates.
After Ardagh announced in May that the previous chairman of the group with voting control for stocks had collapsed, the debate shifted to whether Irish entrepreneurs and other shareholders would hand over the entire company in exchange for one-off payments.
Coulson claims that Ardagh shareholders will need $300 million to consider walking, according to people familiar with the debate.
Bondholders had previously provided $250 million to these shareholders, but Irish businessmen have already rejected their proposal, according to people familiar with the matter. Coulson is relaying that group shareholders will not accept anything less than $300 million, they added.
One of the Alda plants in Barnsley, England. In recent years, the company has slowed down interest rates, energy costs and demand from large drink manufacturers © Jamie Lorriman/Alamy
From the ashes of the troubled airline leasing business in the 1990s, Courson’s once-popular investment in Alda is a tough negotiator with financial engineering talent.
Coulson plowed Winduff into Alda’s shares after winning a million-dollar settlements with the investment bank, which advised him on a disastrous acquisition agreement by the airline finance company.
Through a series of debt-burning acquisitions, businessmen have transformed Alda from a regional Irish bottler to one of the world’s largest producers of both glass and metal drink containers. In the process, Courson became a billionaire due to the value of his stock, he became one of Ireland’s wealthiest people, and he has long been called the “cooler” due to his steel attitude.
For decades, Alda has been the issuer of junk debt and has served as a pioneer in Europe’s riskier debt markets. Amidst low interest rates and quantitative easing, Alda’s parent pushed the envelope to issue high-risk bonds that could be paid to bondholders in the form of more debt.
Coulson has previously benefited from buying Ardagh’s risky bonds at discounted prices during the period of market volatility, leaving the business interests alone and overcame fears about the sustainability of the group’s debt.
However, in recent years, Alda has been hit by rising interest rates, surge in costs on energy-intensive plants, and slower demand at large drink manufacturers, the group’s main clients.
Coulson controls more than 50% of Ardagh’s voting rights, but his financial interests are becoming smaller. All Ardagh shareholders will receive a portion of $300 million according to the size of their shares under the proposal.
Control is then passed to Ardagh’s unsecured bond holders, which again notes some of the debt. The group’s most risky bonds are amortized completely in exchange for a small number of shares in the business.
The unsecured debt is primarily held by hedge funds, including London’s Alini Capital Management and Los Angeles-based Canyon Partners, filed separate lawsuits against Alda and Courson in March, claiming that the restructuring could be sucked away from lenders. Ardagh filed last month to dismiss the claim in a New York court based on the inclusion of “many fatal flaws.”
Ardagh is divided into several different silos and subsidiaries, whose metal packaging division is listed on the New York Stock Exchange. This listed Ardagh Metals Packaging unit has 24% of the shares freely traded and held by other investors, and is not affected by the proposed restructuring.
Ardagh and Coulson declined to comment.
