Ardagh Sets $1.57 Billion Toggle Note Sale and Dividend Payment

  • Refinancing plan will offer new debt in euros and dollars
  • Deal may be largest for PIK toggles since HD Supply in 2009

Ardagh Group SA plans to sell $1.565 billion of payment-in-kind toggle notes in one of the largest-ever offerings for this type of bond, in part to pay a dividend to shareholders.

Ardagh will offer seven-year senior notes in euros and dollars, according to a statement Tuesday from the Luxembourg-based packaging company. PIK toggle notes are high-yield bonds that let an issuer choose between making interest payments in cash or by issuing more bonds, usually at a higher rate.

The deal may price as soon as Wednesday, according to a person familiar with the matter, who asked not to be named because the deal is private. Proceeds will be used to repay 1.1 billion euros ($1.24 billion) of PIK notes due in 2019 and return 270 million euros to shareholders, according to the statement.

The offering may be the largest sale of PIK toggle notes since HD Supply Inc. sold $1.58 billion of the securities in 2009, according to data compiled by Bloomberg. Companies have sold $5.2 billion of the bonds this year, up from $3 billion that were sold in all of 2015.

Ardagh has been tapping debt markets to fund expansions. The maker of glass and metal containers sold $4.5 billion of dollar and euro notes in April to acquire assets from Ball Corp and Rexam Plc.

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