Last year I did a big study of Irish companies, looking to see which ones were most indebted. To my disappointment, the great majority of them were not heavily indebted.  As a group, the rise in interest rates didn’t hurt them much. 

The exceptions were mainly the Irish companies that had gone to the USA. Those companies had more gung-go American-style attitudes to debt. Ardagh was one of them.

Ardagh is Paul Coulson’s glass and metal packaging giant. It has 65 factories. They are mainly in Europe and North America, with a few more in Brazil, South Africa, Ethiopia, Nigeria, and Kenya. It employs 20,000 workers. It’s the third-biggest producer of bottles in Europe and the second-biggest producer in the US, and the second-biggest producer of cans in the US and third-biggest in Europe. 

At the level of the operating business, the company is in good shape: it grew revenue by ten per cent and adjusted Ebitda by 34 per cent. 

Deal by deal

Coulson bought the Irish Glass Bottle Company in 1997. The first deal under Coulson was in 1999 when it bought Rockware PLC for £247 million. The deal made it the biggest bottler in the UK. The original Ringsend plant was closed three years later with the loss of 375 jobs. 

In 2007, it bought Rexam’s European operations for €657 million. Next, it got into the metal packaging business with a deal to buy Impress Group for €1.7 billion in 2010.

Next up was the US glass bottle market. In 2012 it bought a massive bottle factory in New Jersey for $220 million and Anchor Glass, owner of eight bottling factories, for $880 million.

After acquisitions, the company got uncomfortably indebted – like a python digesting a deer.

In 2014 it bought the second biggest bottler in North America, VNA, for $1.5 billion, which gave Ardagh a bigger geographic footprint. In 2015 it was can factories in the US for $220 million, followed in 2016 by its biggest-ever acquisition – $2.7 billion for 22 can factories in Europe, North America, and Brazil.

Ardagh is quite highly levered. It has always been aggressive with debt. It has net debt of $9.2 billion against total assets of $11.8 billion and $339 million of quarterly Ebitda, for an annual run rate of $1.35 billion, not counting any further growth.

Ardagh’s interest bill has gone up. It was  $143 million in the first quarter, compared to $15 million last –  though the 2022 number was flattered by a $75 million exceptional swing in fair value of a contract. Like for like, 2022 interest payments were $90 million. The uptick in interest paymets isn’t solely about rising rates though. Ardagh acquired the Africa Glass business in the interim, which resulted in some extra debt. About 95 per cent of Ardagh’s debt is fixed. Their median bond is fixed to 2027.

Ardagh has to invest a lot of cash each quarter to keep the show on the road. In the first quarter it invested $505 million in working capital, and $234 million in capex. Between negative operating cash flow and the reinvestments, free cash flow was minus $507 million in Q1. Though that’s not to say Ardagh will need to invest half a billion in working capital each quarter. There is seasonality to working capital, and the number could swing back positive later in the year.

The Icon

One day before Ardagh’s results were announced, Boat International reported that Paul Coulson’s 68-metre luxury yacht, the Icon, had been sold. 

No price was given, and when asked a representative of Coulson declined to offer a comment on the sale. 

On Boat International’s website, yachts comparable to the Icon (62 to 72 metres long, built between 2007 and 2014) are offered for sale for an average of $67 million. The yacht has previously been offered for rent at €500,000 per week during peak season. 

 On the main deck, the Icon has a pool alongside an al fresco dining area (one of three). Below is the beach club level with a bar, gym, massage room, and sauna.

It is laid out around seven staterooms and sleeps 13 guests, including a master suite on the main deck and a VIP suite on the upper deck (there’s further accommodation below deck for a crew of 19). 

The Icon was launched in 2010. It was the flagship of the Dutch yard Icon Yachts. It’s fitted with quantum stabilizers to keep the yacht stable at anchor or at low speed. Helpful for minimising cocktail spillages. Her two 2,480hp engines can cruise at up to 12.5 knots for a range of 6,000 nautical miles. That’s enough range to take you from Monaco to St Lucia in one hop. 

Icon’s first owner was the Dutch real estate investor Tom van Dam according to SuperYacht Fan, a yachting website. In 2014  it was sold to Russian banker Alexander Mazano who is thought to have sold it to Coulson in 2017. Now it has a new owner.