Unlock Editor’s Digest Lock for Free
FT editor Roula Khalaf will select your favorite stories in this weekly newsletter.
Paul Coulson has signed a contract with Alda Group bondholders for shareholders to receive $300 million to leave the debt-rich packaging group built up by Irish entrepreneurs through decades of acquisitions.
Alda, based in Luxembourg and producing glass bottles and metal cans at a facility spanning Europe, the US and Africa, announced a restructuring transaction on Monday, increasing its more than a year of negotiations with creditors over $10 billion in an era of cheap money and low interest rates.
Coulson has given over control to a group of Alda’s bondholders under the terms of the contract, finishing a decades-long streak as one of the most important figures in the European junk bond market. The 72-year-old entrepreneur, a former accountant known as “cooler” in his hometown of Ireland, transformed Alda into one of the world’s largest packaging groups through a series of leveraged acquisitions.
Coulson controls more than 50% of Ardagh’s voting rights, but his economic interests are low at 36%, so he receives a payment of just over $300 million, or just over $100 million.
Control is set to be passed on to Alda’s unsecured bond holders as part of the debt swap. The group’s most risky $1.7 billion bonds are amortized completely in exchange for a small number of shares in the business. The bondholders will also provide the group with $1.5 billion in new funding, but the loan provided by Apollo Global Management last year will be fully repaid.
Coulson’s investment in Ardagh began in the 1990s with a problematic airline leasing business.
Coulson used cash to acquire shares in the small Dublin-based bottling company after winning millions of payments from an investment bank that advised him on the sour acquisition that made his company kneel.
The acquisition, which supported a string of debt over the next 20 years, has transformed the business into one of the world’s largest producers of glass and metal drink containers, making Coulson one of Ireland’s wealthiest people.
Ardagh has become one of the biggest players in the market for risky debt in Europe due to the frequent issuance of junk bonds. During low interest rates and quantitative easing, Ardagh’s parent company has pushed the boundaries to what credit investors can be angry with and issued high-risk bonds that can pay bondholders’ interest in the form of more debt.
However, the rise in interest rates and energy costs in recent years have faced a highly leveraged business facing billions of dollars in maturities ahead, and a wide range of packaging industries where glass furnaces are particularly sensitive to price fluctuations.
After creditors offered Ardagh shareholders a $250 million walkout last month, the Financial Times reported that Coulson insisted on receiving $300 million to abandon the company, along with other conditions to quickly secure funds.
Alda is divided into several different silos and subsidiaries. The metal packaging division listed on the New York Stock Exchange is free to trade 24% of its stock and is not affected by the proposed restructuring.
“The transaction will maintain ownership of the group’s glass and metal packaging business and introduce a sustainable capital structure with significantly lower leverage and significantly lower maturity profile.”
“Along with the injection of New Capital, Alda is suited to work with future shareholders to realize their business plans.”