Warburg Pincus and TowerBrook Capital Partners have been in talks with the AA for some months, and a final resolution is expected on Tuesday (November 24) ahead of a deadline set by UK’s Takeover Panel. The AA has indicated in a statement that it is likely to accept the deal, ‘having considered carefully the viability of a range of alternative potential debt and equity refinancing options’.
The roadside recovery organisation has been saddled with debt for years, and talks with PE companies have been ongoing through the autumn. If it accepts a buyout at 35p per share, that will represent an 85 percent write-down of the valuation of the company, as shares were £2.50 when it was floated on the stock market in 2014.
Most of the firm’s debt was loaded on to it by the previous PE owners ahead of the 2014 float. The then owners loaded £3bn debt on the balance sheet, and took out a payment of £2.6bn in cash. This is around how much debt the 115 year-old organisation still has.