Good morning, it's Paul & Jack here with the SCVR for Monday.

Timing - there's a fair bit to cover today, so we might over-run the 1pm official finish time. I'll make a note here once we're done, as usual. Today's report is now finished.

Agenda -


This part written by Paul

Aa (LON:AA.)

Share price: 31.5p (down 6%, at 08:12)
No. shares: 622.8m
Market cap: £196.2m

Update on possible offer

It looks as if things have moved forwards in a positive way for shareholders (anything above 0p is a good outcome, in my view);

The Board of Directors of AA (the "Board") notes the recent press speculation and confirms that it has received a non-binding proposal from TowerBrook Capital Partners (U.K.) LLP and Warburg Pincus International LLC (together the "Consortium") regarding a possible cash offer of 35 pence per AA share for the entire issued, and to be issued, ordinary share capital of the Company (the "Proposal").
On 27 October 2020, AA announced that commercial discussions and due diligence were progressing with the Consortium. The Company confirms that these commercial discussions have advanced and that following a period of due diligence have led to the Consortium submitting the Proposal.

The bidders intend to inject more equity, and help refinance the huge debt mountain.

AA’s Board says it has considered all options, and would be willing to recommend this 35p bid

My opinion - this is a lucky outcome for AA shareholders, who were in such a weak position vs debt holders, that a wipeout for equity was a considerable risk.

Is a higher competing offer likely? It’s always possible, but the greater risk is that the bidders might pull out, and that could easily end up with equity worth little to nothing.

Therefore, in my view, the logical thing to do is to accept the 35p offer, if it becomes formal. Actually, if it were me, I would sell in the market now, just in case the bid falls…

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