Ardagh Packaging Holdings Limited
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Bond Report Front Section v2_Layout 1 25/03/2013 10:52 Page 1 Ardagh Packaging Holdings Limited Annual Report to Bondholders for the year ended 31 December 2012 one brandone vision TABLE OF CONTENTS NOTES TO DEFINED TERMS USED IN THIS ANNUAL REPORT…………………………………………………….2 PRESENTATION OF FINANCIAL AND OTHER INFORMATION………………………………………………………5 FORWARD-LOOKING STATEMENTS…………………………………………………………………………………….7 INDUSTRY AND MARKET DATA…………………………………………………………………………………………..8 RISK FACTORS……………………………………………………………………………………………………………..11 OVERVIEW OF THE BUSINESS………………………………………………………………………………………….28 ARDAGH DIVISIONS……………………………………………………………………………………………………….39 SELECTED FINANCIAL INFORMATION………………………………………………………………………………...52 OPERATING AND FINANCIAL REVIEW………………………………………………………………………………...54 DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES………………………………………………………….68 MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS……………………………………………...73 QUANTITATIVE AND QUALITATIVE DISCLOSURES OF MARKET RISK………………………………………….75 INDEX TO THE FINANCIAL STATEMENTS……………………………………………………………………………F-1 1 Ardagh Packaging Holdings Limited NOTES ON DEFINED TERMS USED IN THIS ANNUAL REPORT The following terms used in this Annual Report have the meanings assigned to them below: “Impress” or “Metal Packaging”.................................. The metal packaging business acquired in the Metal Packaging Acquisition. “Anchor”, “AGI” or ”Acquired Business” .................................... The US glass packaging business acquired on August 20, 2012. “Ardagh”, “Ardagh Packaging ”, Ardagh Packaging Holdings Limited and its subsidiaries (including any “Group”, “the Company” “we”, predecessors), unless the context otherwise requires. “us” and “our” ................................ “Ardagh Packaging Holdings A private company incorporated under the laws of Ireland (previously named Limited”, “APHL” ........................... Ardagh Glass Holdings Limited). “AGF” ................................................ Ardagh Glass Finance plc, a public limited company incorporated under the laws of Ireland, which is the issuer of the 2007 Senior Notes, the 2009 Senior Secured Notes and the January 2010 Senior Notes. “APF” ............................................... Ardagh Packaging Finance plc, a public limited company incorporated under the laws of Ireland, the co-issuer of 2010 Senior Secured Notes, October 2010 Senior Notes, the January 2012 Senior Notes and the July 2012 Senior Notes. “APG” ................................................ Ardagh Packaging Group Limited (formerly Ardagh Packaging Group plc), a private limited company incorporated under the laws of Ireland. “ARD Finance S.A.” ......................... A company organised under the laws of Luxembourg and an intermediate parent company of APHL. The Issuer of the 11.125% Euro Denominated PIK Notes and US Dollar Denominated PIK Notes issued May 2011. “Ardagh Group S.A”. ......................... The ultimate holding company of the Group, a public limited liability company (société anonyme) incorporated and existing under the laws of the Grand Duchy of Luxembourg, having its registered office at 56 rue Charles Martel, L- 2134 Luxembourg and registered with the registrar of Commerce and Companies under number B.53248. “Ardagh Holdings USA”..................... Ardagh Holdings USA Inc., a Delaware corporation,the co-issuer of 2010 Senior Secured Notes, October 2010 Senior Notes, the January 2012 Senior Notes and the July 2012 Senior Notes. “Australasian Senior Bank Facility”, The A$155 million (initially A$170 million) multicurrency senior bank debt “BOSI facility” ................................ facility provided by Bank of Scotland International, which matures on 21 December 2013. “BAML Revolving Credit Facility” , The US$20 million revolving credit facility acquired with Anchor and amended “Amended RCF” ........................... on August 20, 2012 with Bank of America Merrill Lynch “Boxal” ............................................. The Aluminium packaging business acquired from Exal Corporation on 1 March 2012 “EBITDA” .......................................... Group operating profit before depreciation, amortisation and exceptional items. EBITDA margin is calculated as EBITDA divided by Group revenues. EBITDA and EBITDA margin are presented because we believe that they are frequently used by securities analysts, investors and other interested parties in evaluating companies in our industry. However, other companies may calculate EBITDA and EBITDA margin in a different manner than we do. EBITDA and EBITDA margin are not measurements of financial performance under IFRS and should not be considered an alternative to cash flow from operating activities or as a measure of liquidity or an alternative to profit/(loss) on ordinary activities as indicators of our operating performance or any other measures of performance derived in accordance with IFRS. 2 Ardagh Packaging Holdings Limited “GE Commercial Finance Facility” .... Invoice discounting facility agreement dated 23 March 2009 between Ardagh Packaging Holdings and GE Commercial Finance Limited, as more fully described in “Description of Other Indebtedness—GE Commercial Finance Facility”. “Glass Packaging Division” .............. Glass Packaging Division encompasses the Glass operations in both Europe and North America “IFRS” ............................................... International Financial Reporting Standards as adopted by the European Union including interpretation of the IFRS interpretation committee. “Metal Packaging Acquisition” ........... The acquisition of the entire share capital of Impress Coöperative U.A. (now renamed Ardagh Metal) on 7 December 2010 pursuant to the sale and purchase agreement between Ardagh Group S.A. (previously named Ardagh Glass Group S.A.) and the holders of the equity interests of Impress Coöperative U.A. dated 24 September 2010. “Indentures” ...................................... The Secured indenture and the Senior Indenture. “Intercreditor Agreement” .................. The intercreditor agreement entered into on 7 December 2010, as amended on 28 February 2011, among Ardagh Packaging Finance, Ardagh Packaging, Citibank, N.A., London Branch in its capacity as security agent thereunder and trustee for the 2017 Secured Notes, the 2020 Senior Notes, Law Debenture Trust Company of New York, in its capacity as trustee for the 2009 Secured Notes, and The Bank of New York Mellon, in its capacity as trustee for the 2007 Senior Notes and the January 2010 Senior Notes, among others. “Issuers”........................................... The Secured Notes Co-Issuers and the Senior Notes Co-Issuers. “Metal Packaging Division” .............. Metal Packaging Division encompasses the metal packaging operations in Europe, North America and Asia Pacific “Notes”.... .......................................... The Secured Notes and the Senior Notes. “Secured Notes” ................................ The Euro Secured Notes and the USD Secured Notes. “Existing Unsecured Notes” .............. The 2007 Senior Notes, the January 2010 Senior Notes, the October 2010 Senior Notes, the January 2012 Senior Notes and the July 2012 Senior Notes. “2009 Senior Secured Notes”.......... The existing 9.25% First Priority Senior Secured Notes due 2016 issued by Ardagh Glass Finance plc in 2009. “2010 Senior Secured Notes”.......... The 7.375% First Priority Senior Secured Notes due 2017 issued in 2010. “2007 Senior Notes”........................ The existing 7.125% Senior Notes due 2017 issued in 2007. “January 2010 Senior Notes”.......... The 8¾% Senior Notes due 2020 that were issued in January 2010. “October 2010 Senior Notes” ............ The 9.250% Senior Notes due 2020 issued by Ardagh Packaging Finance plc in 2010 and the US Dollar denominated 9.125% Senior Notes due 2020 issued by Ardagh Packaging Finance plc in 2010. “February 2011 Senior Notes”…….. The €200.0 million 9.250% Senior Notes due 2020 issued in February 2011. “January 2012 Senior Secured The additional $160,000,000 aggregate principal amount of US Dollar 7.375% Notes” ........................................... First Priority Senior Secured Notes due 2017 issued in 2012. “January 2012 Senior Notes” ............ The $260,000,000 aggregate principal amount of US Dollar denominated 9.125% Senior Notes due 2020 co- issued in 2012. “August 2012 Senior Secured The Euro and US Dollar 7.375% First Priority Senior Secured Notes due 2017 Notes” .......................................... co - issued by Ardagh Packaging Finance plc and Ardagh Holdings USA in 2012. “August 2012 Senior Notes” ............. The US Dollar denominated 9.125% Senior Notes due 2020 co- issued by Ardagh Packaging Finance plc and Ardagh Holdings USA in 2012. 3 Ardagh Packaging Holdings Limited “Leone” ............................................ The glass packaging business acquired on March 23, 2012. “Parent Guarantor” ............................ Ardagh Packaging Holdings Limited. “PIK Notes” ....................................... The 11.125% Euro Denominated PIK Notes and US Dollar Denominated PIK Notes issued May 2011. “Securitisation Programme” .............. The trade receivables securitisation programme entered into by Ardagh Packaging Holdings on March 1, 2012 for an amount of up to €150.0 million with an issuer of asset-backed commercial paper that is sponsored by HSBC Bank. “Subsidiary Guarantors” .................... The Senior Secured Notes Subsidiary Guarantors and the Senior Notes Subsidiary Guarantors. “U.S. Finance Facility”......................