RLPC-Bankers prepare 4 bln stg Acromas debt refinancing-sources

LONDON, April 15 Mon Apr 15, 2013 11:34am EDT

LONDON, April 15 (Reuters) - Bankers are working on a refinancing of the 4 billion pound ($6.2 billion) debts of the private equity-owned firm behind British motoring services firm AA and travel company Saga, banking sources said on Monday.

The refinancing at the firm, called Acromas, would be part of plans to possibly spin off the AA and Saga six years after they were acquired, a move which coincided with the financial crisis and which left banks unable to syndicate the debt which financed the deal.

The quest for a refinancing reflects more positive credit market conditions and is said to be attracting attention from a number of banks eager to participate following a dearth of deals last year.

Acromas is owned by private equity firms Charterhouse , CVC and Permira and was formed in 2007 though the 6.2 billion pound merger of the AA and Saga.

The merger was funded with a 4.8 billion pound leveraged loan, according to Thomson Reuters LPC data, which arrangers Barclays and Mizuho were unable to syndicate after the market collapsed.

Both banks were forced to hold the debt and the business has performed well in the interim. Acromas's net bank and other borrowings stood at 4.1 billion pounds in the 2011-2012 financial year.

Ernst & Young was appointed last year to carry out due diligence and explore valuations for the companies as two separate entities.

Bankers said it was likely Saga would be floated on the stock market and the AA would be sold in a leveraged buyout or LBO.

However, Acromas's debt needs to be refinanced before any further action is taken, bankers said, as 1.75 billion pounds is due to mature in 2015 and the rest by 2017.

As part of the refinancing, a large portion of the debt could be put onto the AA, leaving Saga relatively light in debt and in good shape for an initial public offering or IPO, bankers said.

AA's new financing structure would either look like a traditional leveraged financing - made up in other words by term loans and revolving credit facilities with maturities of up to seven years - or would be structured more akin to an infrastructure deal, with longer-dated debt.

The AA could also be retained instead of sold, bankers added.

Acromas director of communications Paul Green said: "We are focusing on running the business well and there is no rush to do anything," declining to comment further.

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