AA bond move fuels break-up talk


AA van

The owner of the AA and Saga is refinancing £3 billion of debt in a move which could clear the way for a break-up of the group.

Private-equity-owned Acromas Holdings said it is issuing bonds to pay down bank loans, taking advantage of benign conditions in bond markets.

That could allow the group to sell off assets such as roadside recovery chain the AA, leaving over-50s holiday firm Saga to float on the stock market, reports said.

Saga and the AA were combined in a £6.2 billion deal at the height of the credit boom in 2007 to form Acromas, one of the UK's largest private equity-owned companies.
The business was funded by £4.8 billion of bank debt. It also owns brands including BSM driving school and holiday firm Titan Travel.

Acromas is owned by private equity firms CVC, Permira, and Charterhouse, with staff also holding 20% of the group.

The first tranche of its debt is due to expire in September 2015 and the refinancing will allow it to take advantage of cheaper bond rates by replacing high-interest loans with longer-term debt.

The group has around 18 million customers and employs about 38,000 staff.

An Acromas spokesman said: "We can confirm that we are considering issuing bonds, the net proceeds of which would be used to replace existing bank debt. There are no payments to shareholders and no change in ownership of the business.

"Due to US and other regulatory considerations we are unable to comment further."

© 2013 Press Association