The AA to raise £935m for debt repayment plan
The AA announced plans to raise £935m yesterday in a bid to pay off debts and reduce interest payments at the motoring organisation.
The 110-year-old company plans to raise £200m in equity through a placing and a further £735m in a bond issue.
The restructuring will involve the refinancing of £655m class B notes and the redemption of the AA’s £175m so-called PIK (Payment in Kind) notes – an expensive form of debt. The money will also be used to repay £209m of its £663m senior debt facility.
It was left with £3bn net debt following its separation from Saga in 2013.
Since then, the company has gradually reduced the pile, with the latest refinancing helping to cut £655m.
The process is expected to see annual interest payments at the company fall to £135m, leaving it room for dividend payments in 2016.