Ardagh to save $170m a year from bond and assets deals

Glass and metal containers giant Ardagh Group is on track to save $170 million (€152 million) in annual interest payments through deals in recent weeks to spin off its food cans business and refinance its most expensive bond.

The group raised $1.8 billion through the sale of bonds on the market on Tuesday, with the new debt priced to carry a blended interest rate of 3.7 per cent. The proceeds are being used to redeem the group’s $1.65 billion of 2024 bonds, which have a 7.25 per cent rate, together with accrued interest and a premium the company must pay for buying back the debt early.

"Ardagh is very pleased with the strong support from the high-yield market in this latest financing, which results in annual interest savings of $45 million and extends our debt maturities to an average six years," said group chairman and chief executive Paul Coulson.

Debt pile

Meanwhile, Ardagh, which currently has an $8.5 billion debt pile, said earlier this month that it plans to pay down borrowings by using $2.5 billion of cash it expects to receive in the fourth quarter through the sale of its food and speciality cans business into a joint venture.

Ardagh to refinance its most expensive bond

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This deal is expected to cut Ardagh’s interest bill by an additional $125 million annually.

Ardagh will continue to own 43 per cent of the partnership, called Trivium, with the OntarioTeachers’ Pension Plan holding the remainder. However, Trivium will be highly leveraged, having taken on $2.85 billion of debt in recent weeks.