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Sancho Panza

Aa Sells £200Mn Equity Sale To Refi £2.7Bn Debts

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Sky News 24/3/15

'The AA has launched a £200m share sale in order to slim down its £2.7bn debt pile, in a move it said would save the company £45m a year in interest payments and allow it to start paying a dividend.

It also plans to issue £735m of new debt, which together with the funds raised from shareholders will be used to refinance, redeem or repay debt worth around £1bn.

The restructuring will involve the refinancing of £655m class B notes, the redemption of £175m of an expensive form of debt known as payment-in-kind (PIK) notes, and the repayment of £209m of the AA's £663m senior debt facility.

PIK notes are financial instruments that pay bondholders or preference share holders with interest or dividends in the form of additional debt instead of cash. The AA, which made its stock market debut last year, inherited the debt from its years under private equity ownership.

It said it would use the money it would save on servicing its debt to pay dividends of no less than £50m this coming year. The company had previously ruled out dividend payments, saying it needed to use its cashflow to reduce its debt pile.

The AA announced the refinancing as it posted its full-year results, which showed revenues increased 1pc to £983.5m in the 12 months to the end of January.

It said it made £135 per personal member, an increase of 7.1pc. This helped offset the decline in member numbers to 3.8m, down from 3.9m a year earlier.'

So revenue of £983.5 mn ,debts of £2.7 bn and they want to shell out £50mn on divi's.

Edited by Sancho Panza

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Basically a company whose main focus is serving its debt pile with a little bit of emergency car rescue bolted on the end.

I give it 18months.

Edited by spyguy

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Market capitalisation of £2.3 Billion ?

I am no expert but gearing of over 100% is not looking good - is it ?

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