AA..L Regulatory News (AA.)

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN, INTO, OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS IN THAT JURISDICTION

THIS DOES NOT CONSTITUTE AN ANNOUNCEMENT OF A FIRM INTENTION TO MAKE AN OFFER UNDER RULE 2.7 OF THE CITY CODE ON TAKEOVERS AND MERGERS (THE "CODE") AND THERE CAN BE NO CERTAINTY THAT ANY FIRM OFFER WILL BE MADE

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

FOR IMMEDIATE RELEASE

23 November 2020

AA plc ("AA" or the "Company")

Update on Possible Offer

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 Proposal represents a premium of approximately 40 per cent. to the closing share price on 3 August 2020 of 25 pence (being the Business Day prior to the commencement of the Offer Period) and 50 per cent. to the AA's one-month volume weighted average share price of 23.3 pence on the same date. In addition, the Proposal includes the option for eligible AA shareholders to elect to receive unlisted securities in lieu of cash consideration subject, inter alia, to elections being limited in the aggregate to 16 per cent. of the equity of the acquiring group1.

As first stated by the Company in its preliminary results announcement on 7 May 2020, the Board has for some time been reviewing a range of potential refinancing options, including the possibility of raising new equity. The Board believes that the Company needs a more sustainable capital structure and requires a significant amount of additional new equity in order to reduce the Group's indebtedness and to fund future growth. The Proposal being discussed with the Consortium includes an intention to also invest approximately £380 million into the Company to facilitate debt reduction and specifically to support a refinancing of £541 million of the existing Class B2 Secured Notes maturing in July 2022 and £372 million Class A5 Notes maturing in January 2022.

The Board, having considered carefully the viability of a range of alternative potential debt and equity refinancing options together with its financial advisers, has indicated to the Consortium that it would be willing to recommend a cash offer on the terms of the Proposal. Accordingly, the Company is engaged in advanced discussions with the Consortium in relation to the possible offer.

Under Rule 2.6(a) the Consortium must, by no later than 5.00 p.m. (London time) on 24 November 2020, either announce a firm intention to make an offer in accordance with Rule 2.7 of the Code or announce that it does not intend to make an offer, in which case the announcement will be treated as a statement to which Rule 2.8 of the Code applies. This deadline will only be extended further with the consent of the Panel, in accordance with Rule 2.6(c) of the Code.

There can be no certainty that an offer will be made. This announcement is being made with the agreement of the Consortium.

Pursuant to Rule 2.5 of the Code, the Consortium reserves the right to:

(a) vary the form and/or mix of the consideration described in this announcement

(b) announce an offer on less favourable terms than the Proposal:

(i) with the consent of the Board;

(ii) if a third party announces a firm intention to make an offer for AA at a lower value than the Proposal;

(iii) if AA announces, declares or pays a dividend or any other distribution or return of capital to its shareholders after this announcement (in which case the Consortium reserves the right to reduce the offer price by an amount up to the amount of such dividend, distribution or return of capital); or

(iv) if AA announces a whitewash transaction pursuant to the Code.

The person responsible for arranging the release of this announcement on behalf of AA is Nadia Hoosen, Chief Legal Officer and Company Secretary.

Notes:

1. Electing shareholders are likely to have to make a further equity investment very shortly after closing of the offer to avoid a material dilution in their ownership.

Enquiries:

Disclaimer

Evercore Partners International LLP ("Evercore"), which is authorised and regulated by the Financial Conduct Authority ("FCA") in the UK, is acting exclusively as financial adviser to AA and no one else in connection with the matters described in this announcement and will not be responsible to anyone other than AA for providing the protections afforded to clients of Evercore nor for providing advice in connection with the matters referred to herein. Neither Evercore nor any of its subsidiaries, branches or affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of Evercore in connection with this announcement, any statement contained herein, any offer or otherwise. Apart from any responsibilities and liabilities (including, without limitation, those imposed on Evercore by the Financial Services and Markets Act 2000 or under the regulatory regime of any other jurisdiction) which would make the exclusion of liability unlawful, to the fullest extent permitted by applicable law, Evercore and its affiliates disclaim all and any responsibility or liability in respect of this announcement or any statement contained herein.

J.P. Morgan Securities plc, which conducts its UK investment banking business as J.P. Morgan Cazenove ("J.P. Morgan Cazenove"), is authorised in the United Kingdom by the Prudential Regulation Authority (the "PRA") and regulated in the United Kingdom by the PRA and the FCA. J.P. Morgan Cazenove is acting as financial adviser exclusively for AA and no one else in connection with the matters set out in this announcement and will not regard any other person as its client in relation to the matters in this announcement and will not be responsible to anyone other than AA for providing the protections afforded to clients of J.P. Morgan Cazenove, or for providing advice in relation to any matter referred to herein.

Citigroup Global Markets Limited ("Citi"), which is authorised by the PRA and regulated in the UK by the FCA and the PRA, is acting as financial adviser for AA and for no one else in connection with the matters described in this announcement and will not be responsible to anyone other than AA for providing the protections afforded to clients of Citi nor for providing advice in connection with any matters referred to in this announcement. Neither Citi nor any of its affiliates, directors or employees owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, consequential, whether in contract, in tort, in delict, under statute or otherwise) to any person who is not a client of Citi in connection with this announcement, any statement contained herein, any offer or otherwise.

Publication on website

A copy of this announcement will be made available (subject to certain restrictions relating to persons resident in restricted jurisdictions) at www.theaaplc.com/investors in accordance with Rule 26.1 of the Code by no later than 12 noon (London time) on 24 November 2020. For the avoidance of doubt, the content of the website referred to in this announcement is not incorporated into and does not form part of this announcement.