RAC sets talk on £345M offering of 6-year notes

Price talk for the RAC Bidco Ltd.'s £345 million offering of six-year (non-call two) senior class B2 notes has been set in line with initial price thoughts at 5.25%-5.50%. Goldman Sachs is sole physical bookrunner on the transaction. Books close today at 4 p.m. London time.

Proceeds are earmarked to fund a dividend to shareholders. The issuer's parent company is owned by Silver Lake, CVC Capital Partners and GIC. Silver Lake became the company's largest shareholder in September through the acquisition of a 40% stake in RAC, which valued the company at an enterprise value of £3.7 billion.

Ratings are confirmed at B+ (stable) from S&P Global Ratings. RAC Bond Co. PLC is the issuing entity for the new deal, which is a whole business securitization of the company's operating businesses.

The securitization transaction features class A and B notes, with the proceeds on-lent to the company. The class B notes sit subordinate to the £900 million of class A notes, but benefit from dedicated TopCo security, according to the issuer.

Proceeds from the bond sale will be held in escrow until the closing of the Silver Lake investment in the company.

Investor feedback has been positive, with managers noting that the company's subscription model and countercyclical business give the credit a utility-like quality. Sources said the company is likely to find a natural home via investors in RAC's 5% class-B1 notes, which were issued in 2017, similarly, to fund a dividend to then-majority owners CVC.

BofA Securities and J.P. Morgan are global coordinators, with Barclays, BNP Paribas, Deutsche Bank, HSBC, Lloyds Bank Corporate Markets, NatWest Markets and Santander making up the rest of the bookrunning group.

The company reported revenue and adjusted EBITDA of £643 million and £249 million, respectively, for the last 12 months to June 2021.

RAC is the U.K.'s largest provider of roadside assistance.