Dissenting Creditors Challenge Ardagh’s Landmark $10 Billion Debt Restructuring Plan

Major Packaging Group Faces Creditor Resistance Over Debt-for-Equity Swap

Deutsche Bank and activist hedge fund Carronade Capital are mounting a challenge against Ardagh Group’s comprehensive $10 billion restructuring agreement, creating a significant obstacle for one of the world’s largest packaging manufacturers. The opposition emerges despite the deal having secured support from the majority of the company‘s bondholders after extensive negotiations spanning more than a year.

The Luxembourg-based packaging giant, which produces glass and metal containers for major beverage brands worldwide, has been grappling with the combined pressure of rising interest rates, increased energy costs, and substantial debt maturities. The restructuring plan represents one of the most significant corporate debt reorganizations in the European packaging sector in recent years., according to recent studies

Restructuring Terms Spark Dissent Among PIK Bondholders

Under the proposed arrangement, control of Ardagh would transfer from current shareholders to unsecured bondholders through a complex debt-for-equity swap. Shareholders, including Irish billionaire Paul Coulson who founded and built the company, would receive approximately $300 million to relinquish their stakes. Coulson himself stands to obtain just over $100 million from this payout., as previous analysis

The most contentious aspect of the deal involves the complete write-off of $1.7 billion in payment-in-kind (PIK) bonds in exchange for a 7.5 percent equity stake in the restructured company. Deutsche Bank and Carronade Capital, who collectively hold 13 percent of these PIK instruments, argue the terms disproportionately favor other creditors and shareholders at their expense.

“The dissenting creditors believe the current arrangement fails to adequately compensate PIK bondholders for their position,” explained a source familiar with the opposition. “They’re pushing for either an improved settlement or a court-mediated resolution.”, according to additional coverage

Complex Approval Process and Potential Fallback Options

Ardagh’s restructuring faces a intricate approval framework requiring consent from at least 90 percent of all security classes for a consensual implementation. According to the company’s end-of-September announcement, while senior secured and unsecured bondholders have provided nearly unanimous support, PIK holders have only reached approximately 82 percent approval—below the required threshold.

However, with overall support exceeding 75 percent across all security classes, Ardagh retains the option to pursue alternative legal mechanisms to implement the restructuring. The company could potentially utilize a UK scheme of arrangement or other in-court restructuring processes to force through the transaction despite the opposition.

A person involved in the restructuring expressed confidence that the disagreement wouldn’t derail the timeline, stating that the deal’s broad support base provides sufficient momentum to overcome the resistance from a minority of creditors.

Strategic Implications for European Packaging Industry

The outcome of this restructuring battle carries significant implications for the global packaging sector and European high-yield debt markets. Ardagh’s transformation under Paul Coulson’s leadership—through an aggressive series of leveraged buyouts—made the company a benchmark case in European corporate expansion strategies.

The current confrontation highlights the increasing tensions in corporate debt restructuring as companies navigate higher interest rate environments and changing market conditions. The situation also demonstrates the growing influence of activist investors in shaping the terms of major corporate reorganizations.

As bondholders prepare to inject $1.5 billion in new funding and Apollo Global Management’s previous loan gets repaid in full, the restructuring’s success remains contingent on resolving the current impasse with dissenting creditors. The packaging industry watches closely as this landmark case could set important precedents for future corporate debt restructurings in the sector.

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