An ad hoc group of secured noteholders across Ardagh’s capital structure is working with Perella Weinberg Partners (PWP) as financial advisor, as the company is under pressure to address a slew of maturities in the coming years, said two sources familiar.

The group is also working with Gibson Dunn as legal counsel, while the company has tapped Kirkland & Ellis and Houlihan Lokey as advisors. Meanwhile, a crossover group of unsecured holders is working with Milbank, the sources continued.

The Luxembourg-headquartered supplier of glass and metal packaging solutions telegraphed during its recent earnings call that it is currently reviewing options to right-size its capital structure and address roughly USD 3.2bn of maturities in 2025 and 2026, before a wall of maturities of roughly USD 4.6bn comes due in 2027.

On its latest earnings call, management confirmed that a capital structure review is ongoing, and the aim is that maturities do not become current. It also clarified there are no plans to use more of Ardagh Metal Packaging’s (AMP) balance sheet to further support the parent entity.

Ardagh Group reported 4Q23 results with adjusted EBITDA falling 25% year-on-year to USD 243m. But guidance for 2024 was more promising. Management guided deleveraging towards 6.2x net leverage at FY24 with net leverage climbing in 1Q24 before reducing in 2H24. The Luxembourg-based metal packaging firm’s first priority is to keep its capital allocation policy (including its special dividend) unchanged, with deleveraging being a second priority.

Ardagh Metal Packaging paid dividends of USD 251m in FY22 and USD 263m in FY23. Ardagh Group benefitted from an AMP ordinary dividend of USD 182m and AMP 9% preferred share dividend of USD 24m in FY23.

Ardagh Metal Packaging’s bond documentation has some permissive language on restricted payments. A covenant report from February 2021 by Debtwire’s sister service Xtract Research notes that the Build-Up Basket has a starter amount of USD 135m/30% EBITDA, which runs contrary to the principle that Restricted Payments must be earned from profits generated after the issue date. Also, no Permitted Payments reduce the Build-Up Basket according to Xtract. There is an unusual (and rather confusingly drafted) Permitted Payment basket for Parent Dividends, which allows a flat payment of USD 100m per year and doesn’t appear to require a Parent Entity IPO to actually have taken place, Xtract noted. This seems to allow a steady USD 100m dividend flow up to the Ardagh Group, according to Xtract.

The ARGID entity restricted group (which refers to bonds issued by subsidiaries of the Ardagh Group S.A., the dual issuers Ardagh Packaging Finance plc and Ardagh Holdings USA Inc, and the restricted subsidiaries of the parent guarantor Ardagh Group S.A. under those bonds) reported 6.8x net leverage and was 6.6x net levered at 4Q23 pro forma adding back USD 27m of non-recurring charges to earnings.

Calls to the advisors involved were not returned. The company could not be reached for comment.