Anti-trust fight leaves Ardagh facing costly waiver

By Natalie Harrison

NEW YORK, Oct 10 (IFR) - Ireland's Ardagh on Thursday launched what could be a costly waiver to get out of a USD1.6bn bond repayment if US regulators block its acquisition of glass container business Verallia North America (VNA).

The Irish bottler has initiated a consent solicitation on three bonds issued in January to finance the deal, due to uncertainty over whether it will be able to settle a dispute with the US Federal Trade Commission over the takeover.

If Ardagh does not get the green light by January 13, it will have to repay the senior secured 5% EUR250m 2022s and 4.875% USD420m 2022s in full, as well as USD700m of 7% USD850m 2020 senior notes at 101 plus accrued and unpaid interest.

The company is therefore offering bondholders an attractive fee to extend that mandatory redemption deadline to July 13 2014, as it seeks ways to satisfy regulators. Ardagh needs a majority consent from bondholders to push the changes through.

Consenting bondholders will receive a payment and an extension fee amounting to US$10 in total for each US$1,000 principal amount of the dollar notes, and EUR10 in total for each EUR1,000 principal of the euro note.


TWISTS AND TURNS

Industry leader Owens-Illinois Inc (OI), Saint-Gobain Containers Inc and Ardagh together dominate the US$5 billion U.S. market for glass containers.

The anti-trust authorities said in July that Ardagh's purchase of VNA, which makes jam jars and drinks bottles for the US market, would give the Irish company and OI over 75% of the US market for beer and liquor bottles between them.

The seller of the business, France's Saint-Gobain, said the same month that it expected the deal to close by the year-end, but there is still no resolution in sight.

In an August report to bondholders, Ardagh repeated its intention "to vigorously defend the transaction in litigation, while at the same time working with the FTC to seek to resolve its concerns".

Reuters reported last month that Ardagh had offered to sell four US plants to address anti-trust authorities' objections, while a hearing on the merger is due to begin on Dec. 2.

The consent solicitation will expire at 5pm New York time on October 18.

Citi is acting as the solicitation agent.