Is Ardagh a step closer to selling its metal-containers unit?
The company previously announced it was planning to sell a minority stake in the containers unit to pay down debt or fund acquisitions.
According to reports, it wants to retain a majority control of the metals container division and will use the proceeds to either reduce its €4.7bn debt or to sponsor further acquisitions.
Oressa Initial Public Offering
Oressa, which makes steel and aluminum cans for food storage, filed for a US initial public offering in June. If the bids for the unit don’t meet the company’s expectations, it could go ahead with the Oressa IPO.
This week, Moody's Investors Service changed its rating of Ardagh Packaging Group and its subsidiaries from ‘stable’ to ‘positive’.
The ratings include; the B3 corporate family rating ('CFR'), the B3-PD probability of default rating ('PDR'), the Ba3 rating on the senior secured term loan B, the Ba3 ratings on the senior secured notes and senior secured floating rate notes, the Caa1 ratings on the senior unsecured notes and the Caa2 rating on the senior unsecured PIK notes.
The change in rating outlook reflects the significant progress the company has made to improve its operating performance, which Moody's expects will result in gradually improving credit metrics and a material build-up of cash over the next 12-18 months.
The firm recognises the positive progress Ardagh has made integrating the Verallia North America (VNA) business.
Earlier this year Ardagh completed a $220m investment setting up two food can manufacturing plants in Nevada and Virginia to meet specific customer contracts, which will be a major driver of growth as volumes ramp up during 2015.
European metal packaging repositioning programme
In its European metals packaging division the company has been implementing a footprint optimization and business repositioning programme, including, plant consolidations, relocating certain component production to lower cost locations, SG&A cost reductions and withdrawing from certain low margin business lines.
Moody’s predicts Ardagh's rating remains constrained by the high level of adjusted leverage, which will remain above 7.0x through FY 2015. But, thanks to operating margins and cash generation improving over the next 12-18 months it expects the group to have cash balances of around €450m at year end 2015.
The principal methodology used in the ratings was Global Packaging Manufacturers: Metal, Glass, and Plastic Containers published in June 2009. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the US, Canada and EMEA published in June 2009.
