The Ardagh Group yesterday launched what could be a costly waiver to get out of a $1.6 billion bond repayment if US regulators block its acquisition of glass container business Verallia North America (VNA).
The Irish bottler has initiated a consent solicitation on three bonds issued in January to finance the deal, due to uncertainty over whether it will be able to settle a dispute with the US Federal Trade Commission over the takeover.
If Ardagh does not get the green light by 13 January next year, it will have to repay the senior secured 5% €250 million 2022s and 4.8% $420 million 2022s in full, as well as $700 million of 7% $850million 2020 senior notes at 101 plus accrued and unpaid interest.
The company is therefore offering bondholders an attractive fee to extend that mandatory redemption deadline to 13 July 2014, as it seeks ways to satisfy regulators. Ardagh needs a majority consent from bondholders to push the changes through.
Reuters have reported that consenting bondholders will receive a payment and an extension fee amounting to $10 in total for each $1,000 principal amount of the dollar notes, and EUR10 in total for each EUR1,000 principal of the euro note.
Industry leader Owens-Illinois Inc (OI), Saint-Gobain Containers Inc and Ardagh together dominate the $5 billion U.S. market for glass containers.
The anti-trust authorities said in July that Ardagh's purchase of VNA, which makes jam jars and drinks bottles for the US market, would give the Irish company and OI over 75% of the US market for beer and liquor bottles between them.
The news came on the same day that Ardagh Group employees accepted a 6% pay rise over the next two years.
Staff at the packaging organisation’s glass sites in Yorkshire and Scotland, who are members of the union Unite, have voted in favour (80%) of accepting the pay rise, which is an improvement on the 5.5% that had previously been offered.
The improved offer is 2.75% from 1 February to 1 August 2013, at which time a further 0.25% will be paid until 31 January 2014. All pay will be backdated.
