AA plc issuing £735 million class B2 notes for debt repayment, ends year with £259 million cash reserves

By Lisa Kerner

Charlotte, N.C., March 30 – AA plc executive chairman Bob Mackenzie announced the company’s plans for a new debt refinancing, along with “robust” full-year results and details of AA’s strategic investment plans.

The refinancing will reduce costs and facilitate dividend payments, said Mackenzie on Monday during the company’s earnings conference call.

On March 27, AA priced an offering by AA Bond Co. Ltd. of £735 million class B2 secured notes to be issued at par with a coupon of 5½%. The notes are expected to mature on July 31, 2022, according to a company news release.

Proceeds will be used to repay existing class B notes.

Mackenzie said AA also plans to raise £200 million of new equity to pay the balance of its PIK notes, and it also plans to repay £209 million of a senior term facility with existing cash under its whole Business Securitization financing arrangement.

Interest payments are expected to decrease by about £45 million annually as a result of the refinancing, Mackenzie said.

AA’s board intends to recommend dividends of no less than £50 million with respect to the current year ending Jan. 31, 2016.

The company has a “substantial” cash reserve of £259 million available for debt reduction and business investment, according to the earnings presentation.

AA is a Basingstoke, England-based company that provides roadside assistance.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.