Ardagh Prepares $2.3 Billion Green Junk Bond Amid SPAC Deal

Ardagh Metal Packaging is preparing to sell around $2.3 billion of green junk bonds as soon as this week as part of its spinoff with blank-check company backed by billionaire financier Alec Gores.

The new company, formed by the merger of Ardagh Group SA’s metal-packaging business with special-purpose acquisition company Gores Holdings V Inc., will list in New York. Ardagh Metal Packaging’s secured and unsecured debt will be denominated in euros and dollars and will represent a multiple of 3.3 times the company’s debt to earnings in 2021.

Ardagh makes packaging for the food, drinks, pharmaceutical and personal care markets and its cans are used by brands including Heineken, Perrier and Beavertown. The firm’s metal beverage packaging business in Europe generated $421 million of revenue in the third quarter of 2020, while it reported $478 million of sales in the Americas during the three months through September.

Two months into the year, 164 blank-check companies have raised more than $50 billion in initial public offerings on U.S. exchanges, according to data compiled by Bloomberg. That’s already more than half of last year’s all-time record SPAC volume.

Ardagh was last in the debt markets in June with a 790 million-euro ($960 million) bond, which it was able to double in size amid strong investor demand for higher yields.

The company is known for selling esoteric and riskier types of debt. In 2018, Ardagh sold a $350 million payment-in-kind bond — where the borrower can pay their interest with more debt instead of cash — that ranked junior to its other unsecured debt. The proceeds were partly used to pay a dividend.

ARD Holdings SA, the ultimate holding company of Ardagh, has the equivalent of about 8 billion euros of loans and bonds outstanding across the group, according to data compiled by Bloomberg.

Fitch affirmed Ardagh Group’s long-term issuer rating at B+ on Tuesday.

©2021 Bloomberg L.P.

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