Irish-owned packaging group Ardagh insists it still intends to launch part of its business on the New York Stock Exchange despite putting those plans on hold because of "challenging" market conditions.
The Paul Coulson-controlled Ardagh recently said its metals division, Oressa, had filed documents with US financial regulator, the Securities and Exchange Commission (SEC), indicating that it intended to offer its shares for sale on the New York market. The move was expected to earn about €2 billion for the group.
However, Ardagh said on Monday that, while its preparations were virtually complete, conditions for companies launching on the stock exchange in the United States were challenging and, as a result, it did not believe it would be wise to go to the markets at this time.
“The group plans to keep the situation under constant review and to remain ready to launch the initial public offering (IPO) as soon as market conditions are suitable,” Ardagh’s statement added.
It is understood it intends to keep updating its SEC filings to ensure it its ready to float Oressa once it believes market conditions are more suitable.
Ardagh's move follows last month's decision by Denis O'Brien's telecoms group, Digicel, to drop its plans to float part of the company on the New York market because of recent volatility.
Ardagh decided to pursue a flotation of Oressa after talks with a number of potential private equity buyers failed to match expectations.
Mr Coulson stressed to industry analysts during a conference call on Monday flotation remained "very much" part of Ardagh's plans and the group was prepared to go ahead with its IPO of Oressa's shares when conditions allow.
When it announced the flotation, Ardagh said that it intended to use some of the cash raised to pay off part of its €5.3 billion debt. The group borrowed the money to pay for a buying spree that has quadrupled the size of the business over four years.
Ardagh, which has its roots in the old Irish Glass Bottle Company, bought rivals in Europe and the Americas, growing into a business with €4.7 billion revenues a year and 89 factories in 21 countries.
Client list
Its clients include Heineken and AB Inbev, which brews Budweiser, as well as the likes of food processor John West and beauty products manufacturer L’Oréal.
Early in 2014 it completed the €1 billion purchase of bottle maker Verallia North America, from French group, St Gobain. However, it dropped out of the race to buy the European arm of the same business early this year.
At the same time, it signalled both its plans to float Oressa and its intention to cut some of group’s liabilities. Mr Coulson told analysts on Monday that reducing debt remained a priority.
The group has continued to push to add €200 million to earnings, bringing them to €950 million a year. They stood at €910 million at the end of the third quarter.
Simon West, analyst with Moody's Investors' Service, which assesses companies' abilities to repay their debts, said Ardagh's decision to shelve the Oressa flotation was unlikely to alter its credit rating, as that was never factored into any money that it might have raised from equity markets.
“From our perspective, it is likely to remain unchanged. The fact that the flotation has been delayed it not such a big credit negative,” he said.
