Meet the ‘Cooler’ of leveraged finance | USAEMALL.com

One scoop to start: Christopher Hohn’s activist hedge fund has risen 21 per cent this year as bets on jet engine manufacturer GE Aerospace, Visa and Microsoft came good.

In today’s newsletter:

Ireland’s ‘Cooler’ tries to pull off one last score

Why would bondholders offer to pay hundreds of millions of dollars to shareholders in a business set to wipe out some of its debt in a restructuring?

In the case of Ardagh, the answer may lie in the man set across the table: a steely septuagenarian businessman nicknamed “the Cooler”.

DD’s Robert Smith and the FT’s Euan Healy revealed on Thursday that bondholders at the drinks-container maker are considering a demand from Ardagh’s largest shareholder Paul Coulson to hand over $300mn to shareholders, in exchange for them walking away from the business and ceding control.

The tough negotiating position comes after an early $250mn offer from these debtholders — mostly credit hedge funds — was roundly rejected.

While Coulson may at first glance appear to be a mere packaging mogul, it makes more sense to understand his stock and trade as debt.

Coulson is widely regarded as one of the godfathers of the European high-yield bond market. Ardagh has issued billions of dollars of junk bonds over the decades, forging new financial structures while minting healthy bonuses for his loyal bankers at Citigroup. 

And naturally, Coulson himself became a billionaire along the way, with the value of his Ardagh stake making him one of the richest people in Ireland.

An accountant by training, the Cooler entered the glass business through the unconventional route of a structured finance play gone awry. 

Many in the Irish business scene counted him down and out when a disastrous deal blew up his aircraft leasing business in the 1990s. But Coulson was able to parlay a seemingly long-shot lawsuit against the bank that advised him on the transaction into a multimillion payout. 

The buccaneering Irishman ploughed the winnings into a humble Irish glass bottler. Through shrewd dealmaking — and liberal use of leverage — Ardagh became one of the largest beer bottle and can makers in the world.

Ardagh’s capital structure has long been fiendishly complicated and in a constant state of flux. At the height of quantitative easing, Coulson broke new ground in the field of financial engineering by issuing “super PIK” bonds (structure diagram here) that paid Ardagh shareholders a handsome dividend.

Even as Ardagh’s troubles have grown, Coulson’s propensity for financial complexity has remained intact. Last year the company struck a controversial €1bn loan from private capital powerhouse Apollo that shifted assets away from other creditors. (Bloomberg unpacked some of the complexity behind the “hunter gatherer” deal last year).

While the proposal on the table means Coulson would have to bid adieu to the glass business he forged over decades, he would be in line for more than a third of the $300mn windfall if it comes off.

Not a bad outcome for the owner of a business drowning in more than $10bn of debt that it won’t be able to fully repay.

Thumbs-down at Bumble

Dating apps aren’t getting much love these days and at Bumble, that’s causing some ructions.

Chief executive Whitney Wolfe Herd criticised staff for “overreacting” this week as she revealed plans to lay off nearly a third of the workforce on a company-wide call.

“Y’all need to calm down,” she said as employees flooded the call with thumbs-down emojis, in comments scooped by the FT’s Kieran Smith and Costas Mourselas.

Wolfe Herd added she was “worried” that Bumble might collapse by next year if measures weren’t taken to safeguard the business.

Over the past year, the online dating service’s market cap has dropped nearly 30 per cent to about $700mn.

The company’s fortunes have deteriorated since 2019, when Blackstone bought a majority stake in Bumble’s parent MagicLab as part of a broader push into tech start-ups.

The dating group went public in 2021 at the height of the pandemic-era tech boom and received a raucous response from investors.

But it’s been downhill since then, first due to a collapse in tech valuations and then with Gen Z complaining of dating burnout.

That was bad news for Blackstone, which was able to cash out roughly twice its investment cost and sat on billions of dollars more in gains after Bumble’s IPO. 

That windfall quickly evaporated as Bumble’s stock plunged, putting pressure on Blackstone. It had borrowed against its Bumble shares to secure an $860mn margin loan from Citibank soon after the IPO, DD’s Antoine Gara previously reported.

By the end of 2021 Bumble’s stock price had halved and Blackstone quickly sold off millions of shares, paying back much of the loan. Recent filings show its shares continued to be pledged against the loan.

The deal was once considered a big winner for a $4.5bn Blackstone growth fund raised in 2021, alongside other earlier stage companies like oat milk start-up Oatly. Bumble’s woes have helped to drag the fund’s returns into slightly negative territory, according to public disclosures.

And Wolfe Herd’s comments don’t exactly fill you with confidence for the future.

“We are in a decline from a numbers standpoint,” she said on the call. “Dating apps are feeling like a thing of the past.”

Job moves

• Lazard has hired Cyrille Cotte as head of insurance in its financial institutions group in Europe. He joins from Evercore, where he was a senior managing director.

• Krispy Kreme has named Raphael Duvivier as its finance chief. He is currently international president at the doughnut maker and succeeds Jeremiah Ashukian, who is leaving to “pursue an opportunity with a private company”, Krispy Kreme has said.

• Citigroup has appointed Akira Kiyota and Taiji Nagasaka as co-heads of investment banking for Japan, effective from October. Nagasaka is a managing director at Citi and Kiyota joins from Nomura.

Smart reads

A complicated man A former Italian telecoms boss washed up dead on a beach near Dubai last year. The story of his life goes from phone sex chat rooms to the corridors of power and sheds light on the grey areas of international business, Alphaville writes.

Tense talks Paramount agreed a $16mn settlement with the Trump administration this week. It came after weeks of frantic negotiation, the Wall Street Journal writes.

Big winners Goldman Sachs’ chunky dividends came on the back of rosy stress test results earlier this year, the FT reports. Here’s how it won big.

News round-up

OpenAI signs $30bn data centre deal with Oracle (FT)

Toyota Industries’ $33bn take-private deal attacked as ‘study in opacity’ (FT)

Shein hit with €40mn fine in France over misleading discounts (FT)

Drugmakers notch a $5bn win in Republicans’ policy bill (NYT)

Nigeria’s Guaranty Trust plans secondary listing in London (FT)

European CEOs urge Brussels to halt landmark AI Act (FT)

Quant hedge funds ride whiplash markets to first-half riches (Bloomberg)

BlackRock and Schroders bought gilts during market slump (FT)