Home / Business and Economy / Ardagh CDS Payout Nears $174 Million
Ardagh CDS Payout Nears $174 Million
12 Mar
Summary
- Ardagh CDS holders to receive $174 million payout.
- Debt restructuring led to unsecured bondholders taking over firm.
- Credit event determined to have occurred before restructuring.
Holders of Ardagh Group SA's credit default swaps are poised to receive a significant payout, estimated at around $174 million. This outcome follows a complex debt restructuring process that resulted in unsecured bondholders taking over the Irish packaging company.
The settlement for these credit default swaps, which function as insurance-like contracts, was determined by an auction. Notes issued by Ardagh Packaging Finance Plc were valued at 33.9 cents per euro in this auction. This valuation means that CDS holders will receive approximately 66% of the face value of their contracts.
This payout concludes a period of intense debate regarding the exact timing of the credit event that triggered the swaps. External adjudicators ruled in December that the credit event occurred by October 7, preceding the completion of the restructuring. This decision could set a precedent for future out-of-court restructuring deals.
Furthermore, the settlement resolves a contentious issue concerning the inclusion of certain unsecured bonds in the auction. Despite objections from some creditors, the Credit Derivatives Determinations Committee dismissed challenges, allowing the notes to be included as deliverable obligations.
