AA - Upbeat pre-close statement

All,

The AA released an upbeat Pre-close statement in line with our investment thesis that the Company will stabilise membership numbers and focus on cashflow generation to pay down debt.  They have seen an increase in membership numbers for H2'20, (to January ’20) and expect this momentum to continue for FY21.  Additionally, on the B2B segment they have retained or extended their current contracts and won two additional new contracts, with Uber and Admiral. 

Other highlight of the statement was the stated aim to refinance the A5 and B notes, stating “In light of the Group's continued positive performance, the Group intends to continue to proactively manage its capital structure, including refinancing of the A5 and B2 notes due in 2022, subject to market conditions”.  

Note the Company purchased £23m of the B notes in February last year between the pre close statement and release of full year numbers.  We fully expect the Company to purchase further bonds in the market.  

We remain positive on the name and will likely look to upgrade our targets prior to release of full numbers on 31st March.

Tomas