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In The Can

15 July 2019 by lberuti

Usually when a private equity specialist is circling a company, it is rarely good news for its bondholders. But for once, despite the careful attention the Ontario Pension Fund paid to Ardagh, the bondholders of the latter ended better off at the end of the day. Actually, the fund was only really interested in Ardagh’s Food & Specialty Metal Packaging business. It will eventually merge it with Exal to form Trivium Packaging. The combined entity will operate 57 production facilities, principally across Europe and the United States, with roughly 7,800 employees. Upon completion of the transaction, Ardagh will hold a 43% in Trivium (the other 57% being in the hands of Ontario’s Teachers’) and also receive $2.5Bln. That windfall will be used primarily to pay down debt and bring down leverage. Ardagh’s 5-year risk premium, which had already gone down almost 90bps in June (it was worth 262bps on June 3rd), tightened 13bps to close at 168bps. It is now trading within touching distance of the tights reached 18 months ago.