UK Employees Protest against Stock Market Flotation Plan
Employees of UK vehicle breakdown assistance and recovery service the AA – formerly the Automobile Association – and members of the GMB trade union have held a protest against plans by its sister company, Saga, to float on the stock market.
Saga, which specialises in travel and insurance deals for the over -50s, originally planned a flotation back in 2007. Instead, it merged with the AA in a £6.2bn deal engineered by three private equity (PE) groups -Permira, CVC and Charterhouse. The union of the two organisations involved a refinancing deal that loaded £4.8bn of debt onto the combined balance sheet.
A holding company, Acromas, was created, owned 35% by Charterhouse and with CVC and Permira each taking 19.9% stakes and the remainder held either by staff or private investors. Acromas revived the possibility of a full or partial sell-off of the businesses in 2010 and 2012, but refrained from pursuing the option.
However, Acromas is now ready to demerge AA from Saga and float the travel and insurance firm on the London stock exchange (LSE) this year to raise £3bn.
According to the GMB, the plan means that the AA will be left shouldering a £4bn debt load once the flotation takes place. “Each [AA] patrol will be burdened with £1.3m debts requiring interest payments per patrol of at least £53,000 per year. This is nearly twice the average wage paid across the AA,” the union claims
“The private equity grandees who have asset stripped the AA plan to de-merge the AA and Saga,” added GMB regional secretary, Paul Maloney. “When [the Saga flotation] happens, the PE owners will have stripped a total of £5.5bn from the two organisations since 2004.
“Most of the current £4bn debt will be put on AA balance sheet securitised against annual fees paid by AA’s motorist members for breakdown cover.
“This is reckless. The AA accounts show that already nearly half the income in roadside assistance is spent on servicing debts, taxes, interest and profit etc leaving 53.4% to be spent helping with breakdowns. This leaves AA open to competition on price from other roadside recovery firms.
“To add insult to injury AA has now taken the next steps to cut a further £6m from the wages and terms and conditions for the 3,000 patrols. Already patrol staff are required to work beyond their finish time on an almost daily basis to do ‘last job of shift’ working over their allotted hours. Compulsory overtime is also on the cards. This is simply not acceptable.”