Ardagh forced to repay VNA acquisition bonds

Mon Jan 13, 2014 8:37pm GMT

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NEW YORK, Jan 13 (IFR) - Irish packaging firm Ardagh said on Monday that it would repay the USD1.6bn-worth of high-yield bonds it issued to finance its purchase of Verallia North America (VNA) after failing to meet a crucial deadline with US regulators on the acquisition.

The company had hoped to reach a deal with the US Federal Trade Commission (FTC) by January 13 in order to avoid the redemption at a price of 101. It will now likely have to issue new debt to wrap up the financing that could be more costly.

Ardagh and Saint-Gobain have extended the final closing date under the share purchase agreement by just over four months to April 30 2014 from January 13. Ardagh has also arranged committed replacement bridge financing, which it expects to refinance in the capital markets at some point.

Ardagh raised the bonds to finance the acquisition of bottle maker VNA from St. Gobain, but the US regulator has thus far refused to approve the transaction due to anti-trust concerns.

Ardagh is currently negotiating a settlement with the FTC regarding the antitrust complaint on the basis of proposals made by Ardagh on December 11 2013.

"These proposals involve Ardagh divesting six former Anchor Glass plants together with the former Anchor headquarters and infrastructure at Tampa, Florida," Ardagh said in a statement.

"The settlement negotiations with the FTC are progressing satisfactorily. However, it has not proven possible to conclude these settlement negotiations in time for Ardagh to complete the acquisition of Verallia North America ("VNA") by 13 January 2014."

The bonds, issued around a year ago, have remained in escrow ever since.

Ardagh launched a consent solicitation in October, asking bondholders to extend the deadline by six months. The majority of investors rejected the proposal, however, preferring a potential 101 payout on bonds that were then languishing below par.

(Reporting by Natalie Harrison, IFR Markets; Editing by Paul Kilby)

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