AA to be sold and Saga floated on stock market as owners look to secure long term debt deal

By DAILY MAIL REPORTER

Updated: 05:18 EST, 18 June 2013

Acromas, the private equity owner of the AA and over-50s specialist Saga, is to refinance up to £4billion of debt in a move that could pave the way for splitting up the group.

Saga and the AA were brought together at the height of the boom in 2007 in a controversial £6.2billion deal.

Acromas – a consorium made up of CVC, Permira and Charterhouse, with staff owning around a fifth of the business – is one of the UK’s largest private equity-owned businesses with 18million customers and around 38,000 staff. It was funded by £4.8billion of bank debt.

Sell off: Acromas bought the AA and Saga in 2007 for £6.2billion but is now considering selling the AA and floating Saga on the stock market

The group confirmed it is considering a bond issue and using the net proceeds to replace existing bank debt, which falls due in September 2015. The first tranche of debt it has to repay is £1.75billion, with the same amount due a year later in 2016.

In total, Acromas has £4.3billion of bank debt that is racking up interest of more than £200m a year.

The move could allow it to sell off the AA and to float Saga on the stock market.

CVC, Charterhouse and Permira, the owners of Acromas, previously explored a £9billion float of the entire business.

However, amid fears over the volatility of the UK IPO market, the trio began working on plans to break up the group, with the AA sold off before a potential IPO of Saga.

A spokesman said there are no payments to shareholders and no change of ownership in the business, and added that there would be no further comment, due to ‘US and other regulatory considerations’.

Acromas, which also owns the BSM motoring school and Titan Travel, is eyeing new debt, including a £2.5billion package of bridge loans with a maturity of three to five years.

The original deal was clinched at the height of the credit boom in 2007 and attracted fierce criticism from trade unions after 600 AA staff were sacked to cut costs.