Filed by Ardagh Metal Packaging S.A.
Pursuant to Rule 425 under the Securities Act
deemed filed pursuant to 14a-12 under the
Securities Exchange Act of 1934
Form F-4 File No.
Ardagh Metal Packaging S.A.
Gores Holdings V, Inc.
(Commission File No. 001-39429)
The following is a
transcript of an investor call held by Ardagh Metal Packaging S.A.
on Thursday, February 25, 2021.
Citi North America GM2 - Ardagh Metal
Packaging Investor Call
25 February 2021
Good day everyone and thank you for standing by. Welcome to the
Citi-hosted Ardagh Metal Packaging investor conference call.
Today’s conference is being recorded. At this time, I’d like
to turn the conference over to Mr. Paul Coulson. Please go
Thank you everyone for joining us today. On the call with me today
from Ardagh Metal Packaging are Ollie Graham, the CEO of AMP and
David Bourne, the Chief Financial Officer of AMP. Also with me from
Ardagh group are, is David Matthews, our CFO, John
Sheehan, Investor Relations Director and Corporate Development
Director and Cormac Maguire, our Treasurer.
So I don’t propose to
go through the slides in any great detail. I think the transaction
has been well-publicized that we’ve entered into with the Gores
SPAC to create AMP as a newly-listed pure play beverage can
company. The summary of the offering, the summary cap tables and
sources to use, and they’re all laid out the document. And I
thought that the more useful use of time on this call would be for
Ollie Graham to take you through a quick outline of the business
with some of the key issues, and then to devote as much time as
possible to questions and answers. So, with that, I want to
turn it over to Ollie.
Thanks, Paul and hello everybody. So, what I’ll do is I’ll just
touch on a few key slides as I just give an overview as Paul says,
pretty quickly on the business. Looking at slide ten, and this just
gives the overview of the business today. As many of you know, this
is the assets that came out of the Ball Rexam transaction. So,
Europe was mostly ex-Ball, with a couple of Rexam plants; North
America is Rexam North America and Brazil was the Ball Latapack
joint venture, minus aplant. It was a good business, well-invested,
good management teams, but it was a separate set of businesses and
we spent a significant amount of time in the last few years putting
it together into one streamlined business that could be a platform
for accelerated growth with a very good specialty
can footprint and we’re
accelerating that in the work that we’re doing - we expect to be
over 60% by 2024.
Again, as many of you
know, this is a big consolidated industry, with 80% market share
held by the top three in all of our markets and the same top three
and with many advantages from network scale and some significant
challenges you want to enter the market in terms of capital and
skills. So that’s the business, 23 plants - we just bought our 24th
in Ohio in December will be up and running in the next
A key element of this
business is its ESG credentials. On slide 11, we just show the
commitments we’re making as a leading player around things like the
science-based targets on CO2, on our waste management in terms of
water recycled content and on our social side — and you’ll see some
exciting developments and announcements in that area this
And on slide 12, we
just explain what we mean by the circularity story. The key point
here is aluminium beverage cans have the best recycling rates and
the best recycled content. That’s because they’ve always had value
in the recycling stream. As a result, we have the infrastructure,
we have the technologies, we don’t need to develop anything. We
don’t need to get anything to scale, and we don’t need any
additional costs on our package in order to get to pretty much 100%
recycled content on can body stock. So that’s a very significant
advantage versus other substrates, and it’s a big tailwind for our
growth at the moment, and a big security for our growth in the year
ahead as we see the regulators and consumers focusing heavily in
Going on to slide 16,
this just talks a little bit about what we did over the last few
years to build more resilience in the business and get ourselves
the platform for growth. We focused on some high growth categories
and some high growth customers in the sparkling water area, in the
hard seltzer market, in coffees, teas, wines and so on. We
diversified our customer base very significantly, and de-risked the
business in North America. We went from top three being nearly 70
or 80% of our
business, focused on on
two big CSD players and one big beer player. Those three customers
are now more like 30% of our business, and we have a big range of
other people in the mix. And when we look forward, we’re not too
worried who wins them all. And that’s why we’re very confident in
our demand plan. We also focused significantly on specialty cans
and, you know, that’s true looking forward as well. Over 80% of the
investments we’re making in the plan period are in specialty cans
lines, with a very attractive margin profile in both North America
and Brazil in particular.
If I go to slide 17,
that shows you that we’re putting a significant amount of capacity
in the ground, but this is capacity fully backed by customer
agreements. It’s capacity that generates a lot of cashflow and
drives a significant increase in our EBITDA. And that again is
primarily because of the mix benefit from investing in specialty
cans and investing with these high growth customers. So we see
ourselves as being the highest growth company in the industry in
the next few years. And we’re very proud of that position. And as I
say, I’ll show you on the next two slides, how we de-risked
that plan in order to be confident in putting it out into the
Just before covering
that, I think that another significant underpin to the
business is shown on slide 18. We’re not dependent on one source of
growth. There are many sources of growth for beverage cans at
moment, whether they be new categories that are moving into cans -
75% of all product launches in North America are in cans now,
because it’s very difficult to launch any kind of young or ESG or
environmentally sustainable, or even health and wellness brand in a
plastic beverage container. They’ve also been associated with
“cool” categories for young people, like hard seltzers. And then
they have the sustainability tailwinds.
But in Europe, from
Brazil, you have other trends - big regulatory support in Europe as
the Single Use Plastics Directive. We have other switching going on
in Europe for example, in Germany where there’s a big switching
back to cans after some very bad deposit legislation back in 2003,
and in Brazil, it’s really about the growth of beer and the switch
out of two-way glass into one way packaging and the can is the
one-way package that’s actually growing and being invested in.
think again, the key
point is that this is a very de-risked plan. We’re not reliant on
one trend or one thing coming off. We can fall back on lots of
different drivers of growth for the beverage can.
The next two slides 19
and 20 I’ll skip over quickly. I touched on the 75% of product
launches, and then on slide 20, we just illustrate the scale of the
opportunity that’s coming from the plastic story. Although you’re
hearing a lot about new plastics technologies - biodegradables -
they’re not at scale, they’re going to be very high cost. It’s
going to take them a decade to get to where they need to get to on
recycling infrastructure whereas we’re already in place. We have
what we need, and it adds no cost for the can.
So, as I said you know,
on 21 and 22, just to illustrate the de-risking of our plan, we’ve
got a very, very diversified customer base. As I said, we don’t
really mind who wins. We’re with them all. There is going to be a
bit of a battle over some of these categories, in order to see who
comes out number one and number two for the long-term winners.
That’s fine by us because they’ll all need cans in that period. And
so we have a diversified base with significant contract coverage,
so over 80%, and in fact, it’s more like 90% of our multi-year
We’re fully contracted
out through 2022, and contract length is extending at the moment.
It was averaging around three years in 2016; it’s now more like
four or five years and some are out to seven years. And we also
have very significant contract coverage in terms of the way we pass
through costs, the way that metal is dealt with, which is all
hedged out and the way that we’re protected. So I would say we’re
covered with our contracts and our contracts provide very
significant protection in terms of pass through clauses, either on
PPI clauses or on the fuel hedging of any raw materials.
If I go to slide 22,
this illustrates the other way we dealt with the plan. It was very
focused on being what we call “under the roof”. That means on one
of our sites and that completely de-risks the people side of it. It
de-risks the permitting, the logistics, all the aspects that go
greenfields, and that
we’ve seen in the North American market with even the biggest
players - having trouble bringing green fields up on time and with
the ramp-up that they predicted. We’ve got an Olive Branch at the
moment project coming up — two new sleek lines in Mississippi and
that same project, another this year in Winston Salem, another two
big sleek lines.
And then in Ohio, we’ve
bought a brown field site. That de-risks the project because it’s
already an existing site and building. We’re just repurposing it.
We also get a lot of people who were working very effectively on
that site before, in a plastics facility. And it’s 40 minutes’
drive from Fremont, one of our best sites. We’ll share the
technology, the people, the maintenance, the tooling. And so, we
see that as the most direct way to establish a new facility in
North America. In Europe, all the projects are under the roof and
in Brazil we have one greenfield. We’ll be using third-party
contractors to do that as a turnkey. And that Brazil team has built
greenfields. They built Manaus plant in 2018. They built Tres Rios
that went to Ball at the time of the transaction. So as I say, we
believe this is the most de-risked project for portfolio in the
beverage can industry today.
If we go on the next
slide, what you can see here is the significant growth we put in
the business’s profitability since 2016. This was essentially
focused on being very disciplined in the market, as I say, changing
the customer portfolio, focusing on specialty cans and doing
proportionate investments where we saw a customer contracts
supporting us. That’s exactly our strategy going forward. So, we
haven’t changed in our strategy. We do see you know, an important
growth opportunity for the industry. We’re taking a proportionate
share of that growth, and that’s driving our profitability together
with the mix shift so that we see significant increases in the
There are some growth
opportunities would not put in the plan. We’ll evaluate those again
very carefully. We’re very tough on the paybacks that we require
with any future expansions, whether in our existing geographies or
our new geographies. We never do any of these without the backing
of our major customers. We have a great relationship now with big
customers around the industry, probably the best competitive
position, but also based on the fact that we’re there with
the metal, which we’ll
be able to continue those strategic discussions in the new world,
even though AMP will be a separate company. And that’s very
important in this industry to be able to partner with these very
large customers on their growth expansion, and therefore de-risk
any projects that we do going forward.
I have a great team on
25, a real good mix of experience and fresh talent. We have people
like Claude, George 30 years in the industry, Bill Walton, 40 years
in the industry, as our chief operating officer, and then a range
of new talent, like Gillian and then David who’ve come in - David
from Amcor, but in the packaging industry, and Gillian would have
very significant private equity background. And then to emphasize,
you know, the entrepreneurial nature of the company led by Paul, we
have very flat structures. We make decisions very quickly, and
that’s been a significant advantage in this current industry
situation - for example, when we go to here on the site in five
days from hearing it gone to someone else to making sure that we’ve
got it for ourselves. I’ll hand over to David just to give you a
brief overview on the financials.
Thank you Ollie. So, just looking at the historics quickly on slide
27, revenue grew from 3.33 billion in FY 2018 team to 3.45 billion
in FY 20 due to volume gains positive mix shifts. EBITDA increased
the same period from 519 million to 545 million, driven by both the
sales growth and the operating leverage that growth gave us. With
that, I think we will turnover to Q&A and very much
welcome your questions.
Thank you. If you would like to ask a question, please signal by
pressing star one on your telephone keypad. If you are using a
speaker phone, please make sure your mute function is turned off to
allow your signal to reach our equipment. Once again, that is star
one to ask a question and we’ll go first to Chris Croteau with
Hi guys. Thanks for the opportunity to ask the question. I just
want one clarification. So you highlighted you know, the eventual
consult, you know, reduction of the Ardagh equity entities and
through an exchange or
purchase of those shares. I just want to make sure that the $1.4
billion it’s going to be on the Ardagh balance sheet, there any
don’t exchange, there’s no future borrowings on this entity that
would be needed to take those out? That would come from the 1.4
billion? Just want to be clear on that. And what dividends, if that
transaction doesn’t happen would be paid from this entity to
Ardagh? Thank you.
Sorry, Chris. If there’s an offer made - and we haven’t yet
formulated the details of any exchange offers - so therefore, you
know, I’m not at liberty to say what the terms will be but I
don’t imagine that we’d have a world where we would provide a cash
alternative to that offer as such. So I don’t see that except for a
cash component that was to be part of any exchange offer, I
don’t see that would be a cash alternative for shareholders in ARD,
if that’s what you’re talking about. In relation to dividends later
on, you know, we have earmarked the $1.4 billion - up to, you know,
part of that, or all of that could be used for dividends or
distribution to shareholders later. You talked then about dividends
from AMP. The likelihood is that as AMP generates a lot of free
cash flow, would you does that from next year, there will be
dividends from AMP to all the shareholders, including Ardagh Group
of ARD. Does that answer your question?
I just wanted it to be clear that there was going to be a future
financing need to try to clear out the shareholders. And then —
Oh, no, sorry, just let me stop you there, just to be clear. You
mean that there would be money borrowed at AGSA to take out
shareholders? Certainly not.
Okay. And then just the second clarification I might’ve missed it
in the slides, but do you have just percentage of customers in CSD
sparkling alcoholic, sparkling and beer going forward, just, you
know, as parts of the production going forward?
I can give rough guidance, right. It varies a lot by region, but we
don’t normally give it with any precision. You know, we’re pretty
balanced in North America between the soft drinks and beer, you
know, with the hard seltzers. In Europe, we’re also pretty
balanced. We have a very strong beers positions and some energy, so
we’re probably a bit overweight there and, in Brazil, we’re fully
beer there. But yeah, we’re very balanced, actually, across the
We’ll go next to Lucas Grout with Oddo.
Hi, thanks for taking my question. You provided in the material
that most of your customers have pass through clauses in their
contracts? Can you give a percentage on that? And secondly, on your
capex plan, the $1.8 billion through 2024, do you do to get your
head around already, how you plan to split that in terms of capex
for the next couple of years of what the EBITDA contribution’s
going to be? Thank you.
Look, I mean, when we’re well, over 90% of our customer base
with these clauses you know, absent small customers where we don’t
put them in place. because we just show up every year and tell them
what the price is for next year. But with all the big customers,
you know, we have these kinds of clauses in place. Also, to be
absolutely clear, I’m talking about the pass through of things
like labor and direct material costs and energy costs, which are a
pretty small part of our cost base. The big part is LME and
premium, and that is all hedged out at the point of contracting. So
there’s no risk taken on LME and premium at all Midwest premium and
on 50% of our US volumes, the customers buy the coils. So we also
have no risk on that at all, and the other 50% we have on long-term
arrangements - so we know the price of the point that we contract
with our customers and we had matching inflation past through
clauses. So yeah, it essentially, it’s a core, the national
principle that all of our customers have these pass- through
clauses in place.
And then Ollie, if I pick up the BGI split. So yes, these
investments are very front-loaded. So we intend to invest $0.8
billion in 2021, $0.6 billion in 2022, and then that drops down to
billion in the last two
years, making up your total of $1.8 billion. I think in terms of
EBITDA, clearly we don’t talk about our projections in the OM, but
you will see there filed with the SEC some support projections
that, that already be available to the public. I think the best way
to view those is that the base is already sold out. And so while
there will be some continuous improvement projects on the base, the
growth is what is leading to the EBITDA growth, whether it be
through operating leverage, marketing average, the volume gain and
particularly the mix shift of specialty within that
Okay, understood. Thank you.
We’ll go next to Jacqueline Godwin with Baird.
Hi, thank you for the presentation and the question. I guess I had
a couple of questions. So first, could you just talk a little bit
about your balance sheet, you know, any leverage or rating targets
and if you have any IG aspirations down the line?
We have no aspirations to be investment grade. We believe the zip
code for our leverage will be between three and three and a half
Okay. That’s helpful. And then I guess I was hoping you could help
me better understand your specialty can profile. Do you have a
breakout in terms of what percentage of your portfolio is specialty
cans and where the end state of that you intend to be and just, you
know, the margin difference between traditional versus specialty
cans for your company?
There’s a substantially higher margin in specialty cans and there
is in standard cans, but Ollie will give you the breakout of the
Sure. So we’re 43% today across all three regions. That’s weighted
a little bit higher in Brazil at the moment. North America catching
up very fast. Euro pretty stable. And by 2024, we expect to be
around 60%. Again, I’m weighted a little bit high in North
America and Brazil. But in Europe, standard margins are more
similar to specialty margin so there’s less of a differential
there. You know, I think over the years has been a significant
difference on that margin profile in North America and Brazil
changed standard in specialty cans, that’s persistent. You know, we
don’t quote, you know, actual numbers, but you’re certainly one and
a half to two times on a long-term basis is pretty common and
you’ll hear that in the industry.
Okay. No, that’s helpful, and then just a clarification on a
previous question prior. In terms of just the AMP, the acquisition
will these bonds then be guaranteed by the combined entity moving
forward, I guess that’s my understanding?
You mean by Ardagh group? No, certainly not. This is a standalone
capital structure of AMP completely standalone, independent capital
structure. No cross guarantees either direct.
Okay. So then these bonds will be under the ARD structure that not
No. These bonds will be under the AMP structure. These are
bonds being issued in the AMP structure, not by Ardagh at all.
Ardagh is completely separate in terms of its capital structure
once this is done.
Okay. And then the portfolios that, that the business that we’ve
talked about is that the combination between the two? I guess I’m
just a little fuzzy on you know, what cash flows these bonds will
then have access to.
These bonds are in a standalone Ardagh metal packaging business,
which is our whole beverage can business. The beverage can business
in Europe, the United States and Brazil, all of
those cash flows, these
bonds have access to them. These bonds are standalone. They’re not
guaranteed in any way by the, the 80% parent. They’re not
guaranteed by anybody. They’re completely standalone and the cash
flows you have there that we’ve been talking about that all goes to
deal with these bonds.
Okay. Appreciate the color. Thank you very much.
Yeah, thank you. A majority of my questions have been answered
already. Maybe one question on the FY19 EBITDA. It dropped -, could
you provide some color on that?
David Matthews: 2018 and 2019 had a mixture of
that and a few one-off items in 2018. So yeah, if you go to the
earliest slide pack and see the kind of FY15 to FY20 CAGR of 6.5%
of EBITDA growth that’s probably a more reasonable proxy for the
underlying growth rate through that period.
Okay. Thank you. All other questions were already being answered.
So thank you.
We’ll go next to with JP Morgan.
Hello there. Thanks very much for the presentation. Yeah, a couple
of, so you’ve already said that this is going to be a separate
issue and they’re not guaranteed by the existing Ardagh structure,
but are there any cross default language anywhere in these bonds or
in the existing Ardagh bonds anywhere between AMP and the
No, I don’t believe there are any.
Okay. If that changes, please let me know. And then also just in
terms of your longer-term expectations. You’ve talked about, or
sort of implied that the 80% stake in AMP isn’t a fixed amount. You
know, do have a range? You’ve said that it would remain a majority
holder. You know, how much further do you kind of envisage that you
might sell down the AMP stake?
I think what what’s clear is that we might have an exchange
offering, right, at some stage in the near future, which will
probably take the stake down to you know, in the mid-seventies,
somewhere like that, right? 74, 75%. Okay. That’s the first step.
So we’ll give a free flow of about 26%. We will be prepared to take
the stake down lower, obviously, depending on what the value of the
shares is etc, how the whole thing performs. We will be prepared to
take it down further in circumstances where that would help market
liquidity, et cetera, or satisfy needs of ours elsewhere. I don’t
envisage — we don’t have any plans to do that immediately, and I
don’t envisage that we would go down below 50%. Our intention is to
make sure that we keep above 50% - and probably well above 50% is
the current thinking uncertainty not to go below 50% and not to
cede voting control.
Okay, thanks very much for that and I think you did say earlier,
you expected any exchange office to be non-cash, entirely
Not entirely non-cash no. I think just the point was being, I
was being asked, was, would there be a cash alternative of some
kind, which might mean some borrowing. We haven’t yet formulated
what the exchange offering would look like, but certainly a big
component of any exchange offering will be part of our stock in
AMP, but there may be some cash on top of that. That depends where
we are at the time. And we haven’t formulated it, but there will
not be any question of any borrowing to fund any cash component of
buying back shares in ARD.
Okay, great. And then in terms of the $1.4 billion of cash being
retained by AGSA for general corporate purposes and perhaps
dividends are you able to — you don’t want to give guidance as to
exactly what that split is going to be at. You’ve already said
that, but are you able to perhaps sort of frame it in terms of, you
know, are there financial targets that you need to see a range
between that makes that decision or, you know, exactly how is the
thinking behind your dividend policy being formed?
This will be a special dividend somewhere, rather than a dividend
policy as such. The answer is we haven’t worked that out yet. We’d
have a look at this later in the year and see where we stand, what
we’re comfortable with. And there’s no split being given. What
we’ve given you as the direction of what will happen to the $3.4
billion that comes up as part of this transaction. $2 billion will
go to actually reduce debt. The other $1.4 billion will be on the
balance sheet for the time being, which would obviously also reduce
net debt and then we’ll see what we do with it later on the split
between dividend and general corporate purposes. No decision has
been made on that at all.
Okay, thanks very much.
We’ll go next to Barbara Pastorelli with Generali investments.
Hello. Can you hear me?
Yes, I can hear you. Thank you.
Okay. thank you for your presentation. Actually, my questions have
been answered mostly. So one would be, you mentioned that three to
3.5 leverage targets. So could you give us your view on what to
expect in terms of capital allocation once the target is achieved?
Maybe acquisition in increasing dividends then just to have a color
Well, I think the, as I said, the zip code will be somewhere
between three and three and a half. And, you know, that depends on
market conditions, interest rate conditions, everything like that.
And we expect this business to generate substantial free cash flow
because these investments that we’re making are highly cash
generative. And the likelihood is that we would make dividend
payments from next year on. And of course, we will also have the
cash to fund further growth because we think there will be further
investments and further growth beyond the plan that we have between
2021 and 2024.
I don’t see us making
any acquisitions. I don’t rule it out. Our thinking at the
moment is that it’s much more likely to go with organic growth and
with the type of capital allocation policy we have. You know, it’s
pretty unlikely that any investment we make would be in any way, a
leveraging event, more likely to be either leverage mutual or
de-leveraging. And, of course, in the long run, any such
investments would be materially de-leveraging if that makes
Okay. Thank you very much. And another question would be on whether
you could contemplate to open up the capital to new investors, new
shareholders in the future?
Well, I just answered that question to another in detail, but
in short the answer is that we may well do so, that we will
probably extend the free flow from 20% to 25% or 26%, with an
exchange offering to existing our dollar shareholders. And we may
sell shares in the future. No plan now, depending on share price
performance, et cetera. But in no case would we go below 50%? We’d
always keep control.
Okay, thank you.
We’ll go next to Ro Saqir[?] with
Hi, thank you very much for taking the time and presenting the new
bond. I just want to check first and foremost, because I was
reading actually some of the rating agencies comments and I was
under the impression and please correct me if I’m wrong, that there
would be a substantial and significant allocation of the $1.4
billion of excess cash, in net debt payments that will be
potentially allocated for the funding of capital expenditure,
because obviously you’ve alluded to a basic investment program for
$2.1 billion from 2020 to 2024. So I actually thought that there
was going to be a significant portion of the $1.2 billion that will
be allocated to that program. And I thought that was the
understanding, but it seems to me that you’re alluding to the
potential for actually a substantial special dividend payment
towards the Ardagh group of shareholders. So could you clarify
Yeah, no, at no stage, was it envisaged that the payment that’s
being made from AMP to AGSA that any of that $3.4 billion in cash
would be used to fund the development program because most of the
development program falls within AMP itself and AMP has the
resources which we’re raising today to fund that program itself.
So,that doesn’t arise. In relation to what the dividend in the
future might be from Ardagh Group SA its shareholders, no decision
has been taken on that at all. There’s the $2.1 billion investment
program that’s at Ardagh, in the group overall, a very relatively
small amount of that is in glass. So therefore, that will be funded
out of free cashflow, but there was never any question of any of
the $1.4 billion being put into AMP in any way to fund capital
development there. It’s not needed.
And just to give you a number on that — of the investment program,
just under 300 million over a four-year period in is Ardagh Group.
So the business, the Ardagh Group, is well able to fund that.
Okay, perfect. Thanks for clarifying that. So out of the $1.4
billion, basically all of it will see that AGSA and you say it
would have an impact of a net debt position because obviously it’ll
be cash, but as AMP would fund a separate key its capex program,
and that glass actually generate sufficient free cash flow to fund
the capex program. So a significant portion of the $1.4 billion
could be attributable to a special dividend payment. Is that a fair
assumption to have?
The other question I had is about basically what I would look at
the equation of supply and demand, because it seemed to me that
you’re obviously embarking into an extension program of more than
55% of a capacity increase over the next four years, but your
competitors as well, I think you were showing some interesting
graphs around 28% for a Ball or Crown. Could you tell us at this
stage how the supply growth over the next two to four years
compares to the potential demand growth and where there’s any risk
of a potential local capacity situation? I know that obviously you
you’re alluding to the contrary, but to you tell us, please the
supply growth in relation to demand growth so that we can assess
basically what is the balance? And if that balance that will lead
to utilization rates is going to be remaining strong attributes and
obviously providing pricing power that you do have today.
Ollie, will you take that?
I can take that. So, look remember that those capacity numbers are
global. So don’t just focus on the US. I think it’s easy to do
that. And so look, the three regions we operate in currently are
all very, very short. We have no inventory in our system. We have
record lows in all three regions. So that’s talking to starting
point. Even if there was no growth in those three regions this
year, we would take a year to balance the system on inventory.
Then, I think if you go to North America, there’s very good
data now that 8.3 billion cans are imported last year. As an
probably turned away a
billion or two at least of demand. So we think 10 billion is a
conservative number for how short North America was last year, and
it’s growing over 6%, which at a 100 billion is about 7 billion a
So we’re 30 billion
cans short North America for the next three years. And that’s
anywhere from seven to ten can plants, depending on how you count,
because you know that depending on the size of the cans are. And
it’s not easy to bring those up. Everyone can tell you that, you
know, it’s common machinery, but the skills needed to run our lines
at the speed that we run them and the quality that we need to run
them at is very, very challenging. The industry’s never brought up
that much capacity before. So if you think if the year of
inventory, you think that 30 billion needed, I mean, you’ve
got a long way out before the industry catches up with
Then you’d take Europe
has always been pretty balanced. It’s growing over 5%, increase 7%
in 2019 on a 70 billion base. It probably grew 10% plus last year.
And, you know, we’ve only predicted 5% plus in our models, we’ve
got some competitors who aren’t investing there - Crown announced
pretty publicly that they had pulled back for a bit. So again,
this, it feels very short. All the signs we’re getting from the
customers is they need more, not less, but we think that’ll stay
short and may balance out eventually, but not for a while with the
plastic substitution, that’s really happening in Europe.
And Brazil is probably
the one we’re most confident in because that’s hugely driven by a
two-way glass to one-way packaging trends. There’s no one way glass
because those facilities are full and no one’s investing. And so
it’s only can growth and they’ve accelerated the trend there
because they were the ones holding back the switch into one way,
and they’ve gone with it now. And they’ve grown, I think, $4
billion cans in two years. So we predicted 6-10% of that. And
honestly, I think it’s just going to grow as fast as we can
put capacity in the ground as an industry and the industry there,
there’s only four players. And you know, one of them has been
pretty quiet until recently. So,
yes, look, I think
that whichever way we look at it with all the signals we’re
getting, it’s going to take us very significant amount of time for
us to balance out these markets.
Thank you so much. And the last question will be That , it is my
understanding so that you are potentially planning a further
spinoff of a further equity stakes in in form of the exchange of
you’re talking about to existing AGSA shareholders that will be
offered to exchange our AGSA shares into the AMP shares, which
would be spun off effectively. What I’m trying to understand is
you’re also talking to any form or shape, keep control, of course,
and then majority stake in the long run that wouldn’t be, you know,
Is it also envisaged
that you could do a new incremental spinoff to AGSA shareholders
over and above the 5% that directly contemplating in the short
term? i.e. you could actually be more selective — because I think
people are maybe understanding about a stake sell as opposed to the
spinoff, which would be a free distribution of shares on the AMP to
AGSA. I’m trying to understand whether you’d be willing to be
further than the 5% that is being distributed] today.
We don’t do any plans and I’m not saying it’s 5%. It’s off that
order, that’s what I’m talking about in terms of offering. The
further shares that I talked about, were the placing of shares or
cash in the market by AGSA of the shares in AMP. That’s what I was
talking about. We you know, we’re not planning to spin off any
shares to Ardagh shareholders. So just a short answer to that.
Yeah. That’s the 10% that he’s provided with sort of a product
replacement to some shareholders and also the other 10% is going to
the SPAC so that will be paid. What I’m interested about is there’s
the capacity and willingness to do further exchange to ASGA
shareholders that won’t take down the state, furthermore below the
75% or maybe something closer between 55% to 75% that will be
distributed to ASGA shareholders if they take the option to do
No, that’s the short answer. It’s very clear the situation. The
situation is 20% of the free flow from the beginning of this will
be owned by the SPAC shareholders and the PIPE shareholders as per
the document. If we do an exchange offering with our shareholders
and our public shareholders in AGS - the A shareholders - that
could involve part of the consideration for that, or all of it
could involve shares in AMP, which will be part of the shareholding
that’s current of the 80% held by AGSA in AMP that might
approximate to five or 6%. That takes us to 75% owned by AGSA in
AMP. When I referred to our stake in AMP being reduced below that
75%, that would be in return for cash shares, say shares sold to
the market or placed in the market for cash to take it down lower
if at some stage in the future, we decided it was in our interest,
in AMP’s interest for that to happen.
Perfect. Thank you very much for clarifying that.
We’ll go next to Austin Nelson with AIG.
Hi, thanks for taking the questions. First, so you went through
what the cadence is for the $2.1 billion. dollar capex plans. How
should we think about maintenance capex? What I’m really trying to
get at is everything is fully contracted, when we get into 2024
versus 2020, we should more than double EBITDA and have much less
capex I mean, if your target leverage is still three to three and a
half, should we expect, you know, close to a half a billion dollars
type of dividends going out to AMP shareholders?
I think we haven’t made any decisions as to that. The, the
maintenance capex around $100 million in the early years and rises
a bit above that in later years obviously with the investment
that’s being made. To your comments, yes, the business is highly
cash generative, and yes, if we double AGSA, as we have publicly
said, we expect to, in those years, you end up with a lot of free
cash flow. What happens free cash flow? Dividends is one use of it,
but there will also be further growth capex as well I’m sure. We
have conversations going on at the moment with customers,
which we’ll make
decisions on, which are outside the 2021 to 2024 plan, which would
have us make further investments. But again, those investments will
be leverage neutral, possibly de-leveraging - certainly in the
medium term, deleveraging as the free cashflow comes through for
Okay. Excellent. And then just a technical one. I know you touched
on the past years. And the one thing I just wanted to understand
is, if you go back to 2018, you had some difficult — the whole
industry had some difficulty with inflation outside of what was
included in the pass throughs. And you’re seeing that in some of
the same areas, again, currently but your contracts are rolled off,
and you’re obviously in a strong position. How should we think
about the efforts to protect yourself from some inflation outside
of, you know, metal and labor?
There were a couple of things going on at that time. One is that
some of the contracts that were written before the Ardagh takeover
and some of the contracts that were made immediately after had a
bit less protection. It was just a slightly more contested
situation. The contracts we’re writing now have much more
protection. We’ve changed some of the indexes that we use in North
America. We passed through some of the more volatile components. So
you can think about the fact that there’s a lot more protection in
the contracts now than there was then.
And then it’s true that
we had a bit of a spike, it was strictly on freight. And we passed
through freight in North America. There was a little bit of freight
that was not in Europe, and what we started doing there is we’re
using some new hedging mechanisms and synthetic hedges to cover
that. So we’ve learned that and we’ve addressed that. So I think
we’re in a much more secure position than we were back
Okay, perfect. That’s all I had. Thank you.
We’ll go next to Brian Lalli with PGIM.
Hey, Paul, hey Ollie. Thanks for all the time this morning. Just
one quick one for me, again, most of mine have been asked answered
as well, but just on the understanding the free cash flow for this
year specifically, just for, again, the avoidance of doubt, I
think this you’ve talked about it’s, you know, kind of $100 million
of maintenance and correct me if I’m wrong, but it’s $900 million
of kind of the growth capex you know, as it was going to be at
AGSA, you know, if the expectation is obviously that you’ll be free
cashflow negative for a short period of time. Just so we’re all
understand, like, is that the intention is that the cash balance
will be the piece that’s used to fund it and then separately, and I
apologize that this is in the SEC financials, but what’s the size
of the ABL that you plan to have? I just want to kind of square the
circle of like how much you will be on a free cashflow negative
basis this year before, you know, things start getting materially
better as you’ve laid out?
David Matthews: I think to start with this $900
business growth. It’s, it’s $800 in the current year and you’re
absolutely right. The current year will be negative free cashflow.
It will be slightly negative next year, but clearly, we’re looking
to put in place an ABL to ensure that we’ve got sufficient
liquidity and that’ll be sort of including any RCF around three,
$400 million in total. So we feel that we’ve got sufficient
liquidity here to take us through the peak of the spend. And then
as you turn into 2023 and 2024, the business becomes very free
Brian, just to add two points, the ABL, probably a couple of
hundred million, and the, bear in mind that a portion of the
business growth investments would have taken place by the time of
closing. So it won’t burden the company.
Understood. I just wanted to be clear.
It’s about 200 million, I think John, is the number prior to
will be spent on the 800 prior to the business becoming emerging
with the Gores SPAC Okay?
All right. Understood. Okay. That’s clear. Thanks for your time. I
We’ll go next to Jonathan Horner with ICG.
Hey, good afternoon. Yes, again with the questions been answered,
but just kind of one kind of like standing on my mind is to be able
to understand some of the growth this year in 2020. How much of
that has kind of come from, I guess, kind of having capacity
expansion versus COVID tailwinds. We’ve seen kind of you know, a
shift towards cans during COVID is people are not dining out and
buying more stuff from the supermarket? So I just kind of wanted
you to comment on that? That’d be helpful.
Sure. Yeah, sure. So look, I think right across the network,
we don’t see a particular COVID effect, but there are some hotspots
and I can hear from the accent, you’re in one of them, which is the
UK. So I think that, in the UK, the consumer did take that pub
drinking home and we had 20% growth year to date September. Which
obviously pretty extraordinary though the market grew 6% to be fair
in cans in 2019. But we expect the market to go back to, you know,
5% plus in Europe and we think that’s a pretty conservative number.
And we think that some of that UK piece was COVID related. We did
have some COVID downsides though that offset that - the South of
France and Spain, you know, where you had some reduction in the
generally the cafes and the out of home.
But then in the US, we
didn’t really see any significant effect. We had all the trends
before COVID, had a bit of pantry loading at the end of
March and into April, and then the trends just kept on going
and some of those products, I think, will continue to be
bought in cans even when the on-trade opens, because I think
there’ll be a hygiene/convenience play. That means the on trade
will go more to, you know, some, one way packaging as a way of
opening up. And then in Brazil, as I say, we had a month where we
stopped as the industry kind of panicked and I mean, the retail
industry and the fillers and then we just spent the rest of the
year trying to catch up because there was an even bigger switch out
of two-way. And again, the main two-way glass product in Brazil is
a share in bottles. So we think it’s another structural shift to
one way, and the can being cheaper that your alcohol, we also think
that shift does stick. So, yeah, our view as it was a bit of a more
of a tailwind than a headwind, but we don’t think it’s really what
underpinned the overall trends in the industry, which are much more
Okay. That’s helpful. You know, I guess there’s just like
concern that, you know, you spiked up quite a lot this year and I’m
kind of wondering how that continues going forward, but that was
helpful commentary, thank you.
We’ll go next to Kishan Paun with Premier Miton.
Hi guys, thank you so much for taking the question. My question was
in regards to the decision to raise using green bond financing, as
opposed to a more [inaudible], you know, my understanding is that
this transaction is, is a dividend back to the group. And so how
exactly will these proceeds be used for green purposes?
Yeah, look, it’s more that in everything we’re doing. We’re
operating under the green bond framework that’s in place now and
that goes to a whole set of initiatives. We’re doing we’re
aluminium with very
high recycled content levels, we’re doing lightweighting
initiatives. We’ve committed to the science-based targets on CO2
reduction, including scope two scope three, so energy and our own
plants. And also again, the raw materials that we buy in. You know,
we’re looking at the way we build our new plants and some green
certification and the way we do that. So what that means, and
you’ll see this on our website is we can qualify and I think in a
very, very solid way for this green financing framework and then
we’re using that for these bonds. So it’s not really about the use
of the funds. It’s more explaining that to the market, just how
strong an ESG proposition we are and demonstrating that through
this way of raising the money.
And it’s probably worth adding to that, Ollie, that we’ve had ISS
provide a second party opinion on the green financing framework and
eligibility, these proceeds in line with the green bond
Perfect. Thank you guys so much.
Thank you. We’re going to have to wrap up in the next couple of
minutes. So perhaps if we can take just one more question and then
we’ll have to wrap up, I’m afraid.
We’ll go next to Eleonora Martigoni with M&G.
Eleonora Martigonili: Apologies.
Thank you for taking the question. I have three quick ones, if I
may. First one, with regards to the capital structure, why did you
decide to go with a secure/unsecured instead of a flat unsecure
structure? The second one would be, will AMP be a guarantor for the
debt remaining at Ardagh because I read the contradictory
commentary on this point from the rating agencies. And finally, do
you do any reverse factoring by any chance? Thank you.
On the secured/unsecured we have in Ardagh over the years being
quite successful with having a secured and unsecured structure. And
we did look at having an all on the secured structure, but we felt
that it was better to have a secured/unsecured tilted more in favor
of there being more unsecured. And, in the past, we found a
situation at Ardagh where the unsecured markets were closed and the
secured markets were open. So we felt was better on balance to have
a mixed structure. So that was a conscious decision. There is no —
the second question you had was there is no question of there being
any guarantees by AMP of any debt elsewhere in Ardagh or anywhere
else for that matter. It’s just AMP — this cash is not doing
anything other than financing, the activities of AMP, and thirdly
on the reverse factoring. I presume you mean supply chain finance?
David Bourne will give you that number.
Yeah. So I guess just to clarify the question, are you talking
about supply chain finance with our receivables?
Sorry. You were breaking up for me on that. Could you please repeat
If you’re talking about reverse factoring with our payables, which
I think was the question then the answer is we have a single scheme
in North America but on the beverage side, that’s relatively de
minimis in terms of take up at this point. Just a few logistics
suppliers in North America predominantly.
Okay. Thank you.
Good. Well, thank you everybody for your time today and thank you
for your support. I’m probably going to have to wrap it up now, but
thank you very much, indeed.
And that concludes today’s conference. Thank you for your
participation. You may now disconnect.
Information about the Transactions and Where to Find
In connection with
the proposed transactions contemplated by the business combination
agreement, (i) Ardagh Metal Packaging S.A. (“AMPSA”) is
expected to file a registration statement on Form F-4 with the
Securities and Exchange Commission (the “SEC”) that will
constitute a prospectus of AMPSA and include a proxy statement of
Gores Holdings V, Inc. (“GHV”) (the “Registration
Statement”) and (ii) GHV intends to file with the SEC a
definitive proxy statement (the “Definitive Proxy
Statement”) in connection with the proposed business
combination contemplated by the business combination agreement and
will mail the proxy statement/prospectus and other relevant
documents to its stockholders. The proxy statement/prospectus will
contain important information about the proposed business
combination and the other matters to be voted upon at a meeting of
GHV’s stockholders to be held to approve the proposed business
combination contemplated by the business combination agreement and
other matters. Before making any voting or other investment
decision, investors and security holders of GHV are urged to read
the proxy statement/prospectus and all other
relevant documents filed or that will be filed with the SEC in
connection with the proposed business combination as they become
available because they will contain important information about
GHV, AMPSA and the proposed business combination.
security holders will be able to obtain free copies of the
Registration Statement and the Definitive Proxy Statement and all
other relevant documents filed or that will be filed with the SEC
by GHV or AMPSA through the website maintained by the SEC at
www.sec.gov, or by directing a request to Gores Holdings
V, Inc., 9800 Wilshire Boulevard, Beverly Hills, CA 90212,
attention: Jennifer Kwon Chou or by contacting Morrow Sodali LLC,
GHV’s proxy solicitor, for help, toll-free at (800) 662-5200 (banks
and brokers can call collect at (203) 658-9400).
This document is
not a solicitation of a proxy from any investor or securityholder.
Ardagh Group S.A. (the “Company” or “AGSA”), GHV and
AMPSA and certain of their respective directors and executive
officers may be deemed to be participants in the solicitation of
proxies from GHV’s stockholders in connection with the proposed
business combination. Information about GHV’s directors and
executive officers and their ownership of GHV’s securities is set
forth in GHV’s filings with the SEC, and information about AGSA’s
and AMPSA’s directors and executive officers is or will be set
forth in their respective filings with the SEC. Additional
information regarding the interests of those persons and other
persons who may be deemed participants in the proposed business
combination may be obtained by reading the proxy
statement/prospectus regarding the proposed business combination
when it becomes available. You may obtain free copies of these
documents as described in the preceding paragraph.
contains certain forward-looking statements within the meaning of
the federal securities laws with respect to the proposed business
combination, including statements regarding the benefits of the
proposed business combination, the anticipated timing of the
proposed business combination, the services or products offered by
AGSA or AMPSA and the markets in which AGSA or AMPSA operates,
business strategies, debt levels, industry environment, potential
growth opportunities, the effects of regulations and GHV’s, AGSA’s
or AMPSA’s projected future results. These forward-looking
statements generally are identified by the words “believe,”
“project,” “expect,” “anticipate,” “estimate,” “intend,”
“strategy,” “future,” “forecast,” “opportunity,” “plan,” “may,”
“should,” “will,” “would,” “will be,” “will continue,” “will likely
result,” and similar expressions (including the negative versions
of such words or expressions).
statements are predictions, projections and other statements about
future events that are based on current expectations and
assumptions and, as a result, are subject to risks and
uncertainties. Many factors could cause actual future events to
differ materially from the forward-looking statements in this
document, including, but not limited to: (i) the risk that the
proposed business combination may not be completed in a timely
manner or at all, which may adversely affect the price of the
Company’s or GHV’s securities; (ii) the risk that the proposed
business combination may not be completed by GHV’s business
combination deadline and the potential failure to obtain an
extension of the business combination deadline if sought by GHV;
(iii) the failure to satisfy the conditions to the
consummation of the proposed business combination, including the
approval of the proposed business combination
by GHV’s stockholders,
and the satisfaction of the minimum trust account amount following
redemptions by GHV’s public stockholders; (iv) the effect of
the announcement or pendency of the proposed business combination
on AGSA’s or AMPSA’s business relationships, performance, and
business generally; (v) risks that the proposed business
combination disrupts current plans of AGSA or AMPSA and potential
difficulties in AGSA or AMPSA employee retention as a result of the
proposed business combination; (vi) the outcome of any legal
proceedings that may be instituted against the Company or GHV
related to the proposed business combination; (vii) the
ability to maintain, prior to the closing of the proposed business
combination, the listing of GHV’s securities on the NASDAQ Stock
Market, and, following the closing of the proposed business
combination, AMPSA’s shares on the New York Stock Exchange;
(viii) the price of GHV’s securities prior to the closing of
the proposed business combination, and AMPSA’s shares after the
closing of the proposed business combination, including as a result
of volatility resulting from changes in the competitive and highly
regulated industries in which AMPSA plans to operate, variations in
performance across competitors, changes in laws and regulations
affecting AMPSA’s business and changes in the combined capital
structure; and (ix) AMPSA’s ability to implement business
plans, forecasts, and other expectations after the closing of the
proposed business combination, and identify and realize additional
opportunities. The foregoing list of factors is not exhaustive. You
should carefully consider the foregoing factors and the other risks
and uncertainties that will be described in the Definitive Proxy
Statement, including those under “Risk Factors” therein, and other
documents filed by the Company, GHV or AMPSA from time to time with
the SEC. These filings identify and address (or will identify and
address) other important risks and uncertainties that could cause
actual events and results to differ materially from those contained
in the forward-looking statements. Forward-looking statements speak
only as of the date they are made. Readers are cautioned not to put
undue reliance on forward-looking statements, and the Company, GHV
and AMPSA assume no obligation and, except as required by law, do
not intend to update or revise these forward-looking statements,
whether as a result of new information, future events, or
otherwise. None of the Company, GHV or AMPSA gives any assurance
that either GHV or AMPSA will achieve its expectations.
No Offer or
relates to the proposed business combination. This document does
not constitute an offer to sell or exchange, or the solicitation of
an offer to buy or exchange, any securities, nor shall there be any
sale of securities in any jurisdiction in which such offer, sale or
exchange would be unlawful prior to registration or qualification
under the securities laws of any such jurisdiction.
Regulation/IMPORTANT — EEA AND UK RETAIL
The shares to be
issued by AMPSA in the business combination (the “AMPSA
Shares”) are not intended to be offered, sold or otherwise made
available to and should not be offered, sold or otherwise made
available to any retail investor in the EEA or in the UK. For these
purposes, a retail investor means a person who is one (or more) of:
(i) a retail client as defined in point (11) of
Article 4(1) of MiFID II; or (ii) a customer within
the meaning of Directive (EU) 2016/97, where that customer would
not qualify as a professional client as defined in point
(10) of Article 4(1) of MiFID II; or (iii) not
a qualified investor as defined in Regulation (EU) 2017/1129 of the
European Parliament and of the Council of 14 June 2017 (this
regulation together with any implementing measures in any member
state, the “Prospectus Regulation”). Consequently, no offer
of securities to which this communication relates, is made to any
person in any Member State of the EEA which applies the Prospectus
Regulation who are not qualified investors for the purposes of the
Prospectus Regulation, is made in the EEA and no key information
document required by Regulation (EU) No. 1286/2014 (as amended
the “PRIIPs Regulation”) for offering or selling the AMPSA
Shares or otherwise making them available to retail investors in
the EEA or in the United Kingdom will be prepared and therefore
offering or selling the AMPSA Shares or otherwise making them
available to any retail investor in the EEA or in the United
Kingdom may be unlawful under the PRIIPs Regulation.
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