Trio of pri­vate eq­uity suit­ors seek to drive down AA debts

The Daily Telegraph - Business - - Business - By Alan Tovey

A BID­DING war has erupted over the AA as a trio of pri­vate eq­uity firms cir­cle the road­side res­cue com­pany.

The break­down firm said it was in talks with three pos­si­ble buy­ers which in­clude Plat­inum Eq­uity Ad­vi­sors, War­burg Pin­cus, and a joint ap­proach from Cen­ter­bridge Part­ners and Tow­erBrook Cap­i­tal Part­ners.

Each has of­fered to take the 115-yearold com­pany pri­vate and pump in fresh cash to pay down some of its £2.7bn moun­tain of debt.

Bosses at the busi­ness – best known for its 2,700 bright yel­low road­side as­sis­tance ve­hi­cles – said they could also raise money from ex­ist­ing in­vestors.

AA shares surged nearly 17pc to close at 29.2p. They are still down more than 50pc since the start of the year af­ter the lock­down brought road travel to a crash­ing halt.

The AA said that trad­ing had been re­silient de­spite the pan­demic and it ex­pected per­for­mance this year to be only slightly be­low the pre­vi­ous one.

But bosses ad­mit­ted it con­tin­ued to be weighed down by a heavy debt bur­den, which dates back to a pre­vi­ous pe­riod un­der pri­vate eq­uity own­er­ship be­fore the com­pany floated. It be­longed to CVC and Per­mira be­fore go­ing public in 2014.

The AA is also em­broiled in a £200m le­gal bat­tle with for­mer chief ex­ec­u­tive Bob Macken­zie, who was sacked three years ago af­ter hit­ting an­other se­nior man­ager in a ho­tel bar. Mr Macken­zie is su­ing for wrong­ful dis­missal and claims he was suf­fer­ing from anx­i­ety and de­pres­sion at the time.

Around £913m of the com­pany’s bor­row­ing is due to be re­paid in the next two years and it said that debt re­duc­tions were a key pri­or­ity.

In May, the com­pany said that pre­tax prof­its had dou­bled to £107m in the year to Jan­uary on rev­enues up 2pc at £995m. A de­cline in mem­ber­ship was also halted, with num­bers ris­ing by 0.2pc to 3.2 mil­lion.

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