Why would bondholders offer to pay hundreds of millions of dollars to shareholders in a business set to wipe out some of its debt in a restructuring?
In the case of Dublin-based Ardagh, the answer may lie in the man set across the table: a steely septuagenarian businessman nicknamed “the Cooler”.
Bondholders at the drinks-container maker are considering a demand from Ardagh’s largest shareholder Paul Coulson to hand over $300 million (€255 million) to shareholders, in exchange for them walking away from the business and ceding control.
The tough negotiating position comes after an early $250 million offer from these debtholders – mostly credit hedge funds – was roundly rejected.
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While Coulson may at first glance appear to be a mere packaging mogul, it makes more sense to understand his stock and trade as debt.
[ Paul Coulson faces last stand in battle to retain control of ArdaghOpens in new window ]
Coulson is widely regarded as one of the godfathers of the European high-yield bond market. Ardagh has issued billions of dollars of junk bonds over the decades, forging new financial structures while minting healthy bonuses for his loyal bankers at Citigroup.
And naturally, Coulson himself became a billionaire along the way, with the value of his Ardagh stake making him one of the richest people in Ireland.
An accountant by training, the Cooler entered the glass business through the unconventional route of a structured finance play gone awry.
Many in the Irish business scene counted him down and out when a disastrous deal blew up his aircraft leasing business in the 1990s. But Coulson was able to parlay a seemingly long-shot lawsuit against the bank that advised him on the transaction into a multi-million payout.
The buccaneering Irishman ploughed the winnings into a humble Irish glass bottler (the Irish Glass Bottle company in Ringsend). Through shrewd deal making – and liberal use of leverage – Ardagh became one of the largest beer bottle and can makers in the world.
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Ardagh’s capital structure has long been fiendishly complicated and in a constant state of flux. At the height of quantitative easing, Coulson broke new ground in the field of financial engineering by issuing “super PIK” bonds that paid Ardagh shareholders a handsome dividend.
Even as Ardagh’s troubles have grown, Coulson’s propensity for financial complexity has remained intact. Last year the company struck a controversial €1 billion loan from private capital powerhouse Apollo that shifted assets away from other creditors.
While the proposal on the table means Coulson would have to bid adieu to the glass business he forged over decades, he would be in line for more than a third of the $300 million windfall if it comes off.
Not a bad outcome for the owner of a business drowning in more than $10 billion of debt that it won’t be able to fully repay. – Copyright The Financial Times Limited 2025
