AA Bond accepts £325 million 2.875% notes for exchange, sets pricing

By Sarah Lizee

Olympia, Wash., Jan. 31 – AA Bond Co. Ltd. announced the final results and pricing of its offer to exchange up to £325 million of its £697,249,000 of outstanding 2.875% sub-class A5 fixed-rate notes due 2022/2043 (ISIN: XS1529687870/152968787) for new notes plus cash.

The issuer said that exchange instructions for £506,691,000 of the existing notes had been received by the expiration deadline, 11 a.m. ET on Jan. 30.

Because the exchange offer was oversubscribed, the issuer will accept £325 million of the existing notes for exchange on a pro rata basis. The proration factor will be 64.54955%.

The cash consideration was set at £29.08 per £1,000 of existing notes, based on a benchmark reference yield of 0.481% and a purchase yield of 1.731%.

Pricing for the tender offer was set at 6 a.m. ET on Jan. 31 using the 3.75% U.K. Treasury gilt due Sept. 7, 2021 plus 125 basis points.

As previously reported, the issuer set the minimum spread of the new sterling-denominated sub-class A8 fixed-rate notes due 2027/2050 it will issue to settle the offer at 525 bps above the 1.25% Gilt due July 22, 2027.

As announced on Jan. 21, the issuer offered to exchange the notes on a par-for-par basis, and there was a minimum new issue size of £250 million.

The company announced Friday that it will issue £325 million of 5½% sub-class A8 notes at a price of £990.42 per £1,000 of new notes.

Accrued interest will also be paid in cash.

Settlement is expected to take place on Feb. 4.

The issuer said the exchange offer is consistent with its strategy of extending average debt maturities to create a path to deleveraging.

The lead dealer managers are Citigroup Global Markets Ltd. (+44 20 7986 8969 or liabilitymanagement.europe@citi.com) and Credit Suisse Securities (Europe) Ltd. (+44 20 7883 8763 or liability.management@credit-suisse.com).

The dealer managers are Barclays Bank plc, J.P. Morgan Securities plc, Lloyds Bank Corporate Markets plc and Peel Hunt LLP.

The tender agent is Lucid Issuer Services Ltd. (+44 20 7704 0880 or theaa@lucid-is.com).

The issuer, based in Basingstoke, is the United Kingdom’s largest provider of roadside assistance service.

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