Ardagh Group (“Ardagh”) has launched an offering of 500 million USD Senior Secured Notes due 2025 (the “Offering” and the “Notes” respectively).
Proceeds from the issuance of the Notes, net of expenses, will be used to (i) repay in full a 300 million USD term loan credit facility, entered into on March 20, 2020 and drawn on March 23, 2020, (the “Credit Facility”) and (ii) for general corporate purposes.
Ardagh expects to report Adjusted EBITDA for the first quarter of 2020 in line with its guidance of 270 million USD, with no material impact from the recent outbreak of COVID-19 during the quarter.
Overall demand has remained resilient to date, reflecting Ardagh’s focus on the beverage and food end use categories. Operationally, the company is a core part of the supply chain and all production facilities have continued to operate normally. The supply chains have also continued to function satisfactorily to date.
The company ended the quarter with total cash and committed liquidity of 1.1 billion USD, including approximately 950 million USD in cash on hand. This includes proceeds from the Credit Facility and does not include proceeds of the Offering.
Pro forma for this Offering, total cash and committed liquidity would increase to 1.3 billion USD, including approximately 1.15 billion USD in cash.
The outbreak of COVID-19 and measures to prevent its spread, including restrictions on travel, imposition of quarantines and prolonged closures of workplaces and other businesses, including hospitality, leisure and entertainment outlets, and the related cancellation of events, may impact business in a number of ways. This is expected to include an adverse effect from reduced global economic activity and resulting demand for customers’ products and, therefore, the products the company manufactures. It may also adversely affect the company’s ability to operate their business, including potential disruptions to the supply chain and workforce. The COVID-19 impact on capital markets could also impact the cost of borrowing.
Although it is currently too early to estimate, Ardagh expects the ultimate significance of the impact of these disruptions, including the extent of their adverse impact on financial and operational results, will be determined by the length of time that such disruptions continue, which will in turn depend on the duration of the COVID-19 pandemic and the impact of governmental regulations that might be imposed in response to the pandemic.