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Ardagh sale of six US glass plants is ‘credit positive’

The disposal of six glass plants in the US by Ardagh Packaging Group earlier this year is credit positive for the packaging group, according to Moody’s, as it will generate total proceeds of around USD 490 million. It also ‘enhances’ Ardagh’s ability to complete an initial public offering (IPO) in the US in the second half of 2015.

Ardagh Glass, which manufactures glass and metal packaging for the European and US food and beverage markets, completed the disposal of six former Anchor Glass plants to Glass Container LLC, an affiliate of KPS Capital Partners LP, which was first announced back in April. The US Federal Trade Commission had required that Ardagh dispose of the Anchor Glass manufacturing facilities in order to obtain the regulator’s approval of its acquisition of Veralia North America (VNA) from Compagnie de Saint-Gobain SA.
According to Moody’s, the deal will generate total proceeds of around USD 490 million (EUR) 360 million), which, after costs, the company will apply to the prepayment of debt as part of a partial debt refinancing totalling USD 3.1 billion. The refinancing and reduction of total gross debt will reduce leverage and the group’s interest expenses.
As a result of the VNA and Anchor Glass transactions, Moody’s said that Ardagh’s North America glass division will generate annual revenues of approximately USD 2 billion from 16 glass manufacturing facilities, giving it about a 40% share of the US glass container manufacturing market.
“Strategically, the combination of the debt refinancing, the disposal of the six Anchor Glass plants and the acquisition of VNA enhances Ardagh’s ability to complete a planned initial public offering (IPO) in the US in the second half of 2015. Because it is unclear when Ardagh would price the IPO, how much it would raise and how the company would use the proceeds, we have not yet factored any positive benefits from the IPO into our rating assessment,” Moody’s said.

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