Ardagh Group’s riskiest bonds have fallen below 20 cents on the euro for the first time as investors brace themselves for an update this week on how the company plans to reduce the burden of its $12 billion-plus debt pile.
Ardagh, which has delivered weak earnings in recent quarters, reports its latest set of results on Thursday. Holders of the 2027 so-called payment-in-kind notes would stand at the back of the queue to be repaid in the unlikely event of the company running into financial trouble. “Refinancing risk has risen considerably due to a limited recovery in Ebitda, increased leverage, a material interest burden, and a complex capital structure that limits financial headroom and flexibility,” Fitch said. Ebitda refers to earnings before interest, tax, depreciation and amortisation.“While the Apollo deal addresses the 2025 maturity, we view refinancing risk as excessive with material debt maturities in August 2026,” it added.
Bloomberg reported late last month that certain secured, unsecured and PIK noteholders have brought in investment bank PJT Partners and US law firm Akin Gump Strauss & Feld. Debt ratings agency Fitch said in May that Ardagh’s current capital structure, with high levels of borrowings, was ‘unsustainable given its weak operating performance’