Anti-trust fight leaves Ardagh facing costly waiver

Reuters

By Natalie Harrison

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

The Irish bottler has initiated a consent solicitation onthree bonds issued in January to finance the deal, due touncertainty over whether it will be able to settle a disputewith the US Federal Trade Commission over the takeover.

If Ardagh does not get the green light by January13, it will have to repay the senior secured 5% EUR250m 2022sand 4.875% USD420m 2022s in full, as well as USD700m of 7%USD850m 2020 senior notes at 101 plus accrued and unpaidinterest.

The company is therefore offering bondholders an attractivefee to extend that mandatory redemption deadline to July 132014, as it seeks ways to satisfy regulators. Ardagh needs amajority consent from bondholders to push the changes through.

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

TWISTS AND TURNS

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

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

The seller of the business, France's Saint-Gobain, said thesame 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 itsintention "to vigorously defend the transaction in litigation,while at the same time working with the FTC to seek to resolveits concerns".

Reuters reported last month that Ardagh had offered to sellfour 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 onOctober 18.

Citi is acting as the solicitation agent.

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