AA attracts rival bids from private equity firms
Driving association the AA confirmed this morning that it is in talks with three private equity firms over a potential sale.
Centerbridge Partners Europe an Towerbrook Capital Partners, acting jointly, have approached the firm.
Platinum Equity Advisors and Warburg Pincus have separately approached AA with possible cash offers for the company.
“The potential offerors have each indicated that any possible offer would involve a significant amount of new equity capital being injected into the group, in order to reduce indebtedness following completion,” the company said this morning.
The AA, which provides car insurance and roadside assistance to its members, said it will also consider other refinancing options including raising new equity.
At the end of the last financial year the group had approximately £2.65bn of total net debt, with £913m scheduled to fall due for repayment within the next two years, making debt reduction a “key priority”.
AA reported “resilient trading performance” during the coronavirus crisis and expects full-year financial performance to be only slightly below last year.
“However, whilst the group is now beginning to reap the benefits of its strategy and operational improvement, the business remains constrained by a significant debt burden and the board believes this may prove to be an impediment to the group’s future progress and longer-term success,” it said.
Chairman John Leach said: “The AA is a high quality and robust business, with an iconic brand, a resilient business model and a highly committed and loyal workforce.
“However, in order for us to be able to achieve our full potential, the board believes that it must now prioritise reducing the group’s indebtedness to provide the business with the right long-term capital structure – which we hope the current refinancing process will achieve. ”