AA And Saga Owner Speeds Up £4bn Debt Talks

By Mark Kleinman, City Editor

The owner of the AA breakdown recovery service is accelerating talks about a refinancing of its £4bn debt pile, a move that would stall a disposal of either of its prominent operating businesses.

I understand that Acromas Holdings has in recent weeks stepped up discussions about a refinancing of its debts, although its board has yet to reach a firm decision about whether to proceed with such a move.

The company, which also owns Saga, the lifestyle brand targeted at the over-50s, has been conducting a review of its options in conjunction with its shareholders as it begins to approach a 2015 deadline for repaying parts of its debt.

Acromas is owned by Charterhouse, CVC Capital Partners and Permira, three of the UK's biggest private equity groups. The group was created in 2007 when the AA and Saga merged, and the business has been financially resilient despite the difficult economic backdrop.

The company's shareholders have also been examining a sale of the AA, a flotation of Acromas and the sale of a minority stake in the group to outside investors. People close to the company said that one of these options could yet prevail but cautioned that no formal process was under way. Last autumn, the investment banks Lazard and UBS were appointed to give advice on options.

The AA's ownership by private equity firms - it was sold to them by Centrica, the owner of British Gas - became a lightning rod for the industry's criticism by politicians and trade unions.

According to Acromas' half-year financial report in October, the company recorded an 8.3% increase in turnover, with earnings before interest, tax, depreciation and amortisation up 1.3% compared to the first half of the 2011-12 financial year.

Improved cash generation helped the company reduce its net bank debt to £4bn, the lowest since it was founded, Acromas said in the statement.

Acromas also owns the driving school BSM and a number of other insurance and travel brands.

An Acromas spokesman has declined to comment.

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