Ardagh Glass Finance plc - Irish Stock Exchange

the interest accrual period (or, in the case of a partial accrual period, the spot rate on the last day of
such partial accrual period) or, if the date of receipt is within five business days of the last day of the
interest accrual period, the spot rate on the date of receipt. A U.S. Holder that makes this election
must apply it consistently to all debt instruments from year to year and cannot change the election
without the consent of the IRS. A U.S. Holder that uses the accrual method will recognize foreign
currency gain or loss with respect to accrued stated interest income on the date the interest payment
(or proceeds from a sale, exchange, redemption, retirement or other disposition attributable to accrued
interest) is actually received. The amount of foreign currency gain or loss recognized will equal the
difference between the U.S. dollar value of the euro payment received (determined based on the spot
rate on the date the payment is received) in respect of the accrual period and the U.S. dollar value of
stated interest income that has accrued during the accrual period (as determined above), regardless of
whether the payment is in fact converted to U.S. dollars. This foreign currency gain or loss generally
will be treated, for U.S. foreign tax credit purposes, as U.S. source ordinary income or loss, and
generally will not be treated as an adjustment to interest income or expense.
Interest received by a U.S. Holder will be treated as foreign source income for purposes of
calculating that holder’s foreign tax credit limitation. The limitation on foreign taxes eligible for the
U.S. foreign tax credit is calculated separately with respect to specific classes of income. The rules
governing foreign tax credits are complex and, therefore, U.S. Holders should consult their own tax
advisors regarding the availability of foreign tax credits in their particular circumstances.
Original Issue Discount
If the Senior Notes are issued at an issue price less than their stated principal amount they will be
considered to have been issued with original issue discount (‘‘OID’’) for U.S. federal income tax
purposes unless the OID is less than a de minimis threshold (generally 1 ⁄4 of 1% of the Senior Notes’
stated principal amount multiplied by the number of complete years to maturity from its issue date).
Payments of stated interest will be taxable as described above under ‘‘—Payments of Stated
Interest’’.
A U.S. Holder of a Senior Note treated as issued with OID must include the OID in income as
ordinary income for U.S. federal income tax purposes as it accrues under a constant yield method in
advance of receipt of the cash payments attributable to such income, regardless of such U.S. Holder’s
regular method of tax accounting. In general, the amount of OID included in income by the U.S.
Holder of a Senior Note is the sum of the daily portions of OID with respect to such Senior Note for
each day during the taxable year (or portion of the taxable year) on which the U.S. Holder held the
Senior Note. The daily portion of OID on any Senior Note is determined by allocating to each day in
any accrual period a ratable portion of the OID allocable to that accrual period. An accrual period
may be of any length and the accrual periods may vary in length over the term of the Senior Note,
provided that each accrual period is no longer than one year and each scheduled payment of principal
or interest occurs either on the first day or final day of an accrual period. The amount of OID
allocable to each accrual period is generally equal to the difference between (i) the product of the
Senior Note’s adjusted issue price at the beginning of such accrual period and its yield to maturity
(determined on the basis of compounding at the close of each accrual period and appropriately
adjusted to take into account the length of the particular accrual period) and (ii) the amount of any
qualified stated interest payments allocable to such accrual period. The adjusted issue price of a Senior
Note at the beginning of any accrual period is the sum of the issue price of the Senior Note plus the
amount of OID allocable to all prior accrual periods. Under these rules, U.S. Holders generally will
have to include in taxable income increasingly greater amounts of OID in successive accrual periods.
A U.S. Holder of Senior Notes treated as issued with OID must (i) determine OID allocable to
each accrual period in euro using the constant yield method described above, and (ii) translate the
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