Acromas Said to Seek $5.3 Billion Refinancing in AA Saga Split

Acromas Holdings Ltd. is seeking to raise 3.4 billion pounds ($5.3 billion) of debt as it separates its AA roadside recovery unit and the Saga insurance business.

The AA division, the U.K.’s largest roadside assistance provider, plans to raise loans including a 1.9 billion-pound deal as well as 500 million pounds of Class A securities and 655 million pounds of Class B notes, according to bond marketing documents seen by Bloomberg News. The debt will partially repay Acromas’s existing loans, which total about 4 billion pounds.

Acromas, controlled by private equity firms Charterhouse Capital Partners LLP, CVC Capital Partners Ltd. and Permira Advisers LLP, is seeking to separate the AA from Saga at the same time as the refinancing, the documents show. The AA was acquired by Permira and CVC funds in 2004 and then merged with Saga, controlled by Charterhouse, in 2007 backed by 4.8 billion pounds of borrowings, according to Permira’s website.

“We are considering issuing bonds, proceeds of which will refinance bank debt,” said Paul Green, director of communications at Acromas Holdings. “There will be no payment to shareholders and no change of ownership structure.” He declined to comment on the details of the deal.

The company will begin meeting investors to market the Class B notes tomorrow, according to a person with knowledge of the offering, who asked not to be identified because the terms aren’t set. The notes have an expected maturity of six years.

Standard & Poor’s assigned preliminary ratings to the securitization, with the Class A1 and A2 notes graded BBB- and the Class B notes BB, according to a statement. The Class A notes will rank equally with the company’s bank debt and the Class B will be subordinated to both, S&P said.

Deutsche Bank AG, Royal Bank of Scotland Group Plc, Bank of America Corp., Bank of Tokyo-Mitsubishi UFJ Ltd., Barclays Plc, HSBC Holdings Plc, Lloyds Group Banking Plc, Royal Bank of Canada and UBS AG are arranging the loans, the documents show.

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