by Jay Antenen and Bhavna Kaul
Anchor Glass Container is working with advisors to explore strategic options, including a potential sale, ahead of upcoming maturities on its debt later this year, said two sources familiar with the matter.
Strategics are among the parties the CVC Capital-backed producer of glass packaging for beverages and food is targeting as potential buyers, the sources added.
Anchor’s USD 647m Libor+ 275bps first lien loan due December 2023 was last quoted at 74.75/78.75, versus 73.87/76 at the start of May, according to Markit. Its USD 67m L+775bps second lien loan due December 2024 is quoted 39.62/42, from 25/29.5 last month.
The company’s all-loan capital structure has traded in distressed territory for years as the group best known for its beer bottles faces operational challenges and a tough competitive environment.
More recently, the company’s capital spending initiatives and efforts to renegotiate contracts with customers are starting to bear fruit, according to ratings agencies.
Moody’s Investors Service said in December that it forecasts Anchor’s free cash flow will improve in 2023, adding that Anchor enjoys strong relationships and long-term contracts with large customers. The company has also worked to diversify its customer base into higher margin liquor and food containers, according to S&P Global Ratings.
Still, Anchor’s revenue has stagnated since CVC bought the business in 2016 with the company reporting USD 600m in revenue for TTM ended 30 September 2022, compared to USD 610m for the same period six years prior, according to Moody’s reports.
CVC teamed up with UK-based BA Glass to acquire Anchor for USD 1bn from KPS Capital Partners and five years later bought out BA’s stake in the business. To finance the 2016 buyout, Anchor issued the USD 650m first lien TLB, USD 150m second lien and USD 120m asset-backed revolving credit facility.
In 2020, Anchor allowed holders of the second lien to exchange into first lien debt with a haircut.
CVC declined to comment. Anchor did not return requests for comment.