AA receives bid approaches as it seeks new capital

AA

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AA reported it had received three approaches from potential private equity bidders as the company said it needed a large injection of capital to reduce its debt.

The vehicle breakdown company said it had been approached by Centerbridge Partners and TowerBrook Capital Partners working together, Platinum Equity Advisors and Warburg Pincus about potential cash offers for all of its share capital.

AA said each of the potential bidders had indicated they would inject large amounts of new equity capital to reduce debt. AA said it was considering other options to strengthen its finances, including raising new equity.

The Times reported overnight that one potential bidder had suggested an offer of 40p a share valuing AA at about £250m, or about £2.9bn including debt.

AA has £2.65bn of net debt with £913m due to be repaid in the next two years. The company said this amount of debt was a constraint on its long-term business prospects and that it needed significant amounts of new capital.

Chairman John Leach said: "For us to be able to achieve our full potential, the board believes that it must now prioritise reducing the group's indebtedness to provide the business with the right long-term capital structure - which we hope the current refinancing process will achieve."