RAC announces tender offer for Class A2 Notes

11 MAR 2024

THIS ANNOUNCEMENT RELATES TO THE DISCLOSURE OF INFORMATION THAT QUALIFIED OR MAY HAVE QUALIFIED AS INSIDE INFORMATION WITHIN THE MEANING OF ARTICLE 7(1) OF THE MARKET ABUSE REGULATION (EU) 596/2014

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN OR INTO OR TO ANY PERSON LOCATED OR RESIDENT IN THE UNITED STATES OF AMERICA, ITS TERRITORIES AND POSSESSIONS (INCLUDING PUERTO RICO, THE U.S. VIRGIN ISLANDS, GUAM, AMERICAN SAMOA, WAKE ISLAND AND THE NORTHERN MARIANA ISLANDS), ANY STATE OF THE UNITED STATES OF AMERICA OR THE DISTRICT OF COLUMBIA (the United States) OR ANY OTHER JURISDICTION OR TO ANY OTHER PERSON WHERE OR TO WHOM IT IS UNLAWFUL TO RELEASE, PUBLISH OR DISTRIBUTE THIS DOCUMENT (SEE "OFFER AND DISTRIBUTION RESTRICTIONS" BELOW).

RAC Limited announces tender offer for RAC Bond Co plc’s £600,000,000 4.870 per cent. Class A-2 Secured Notes due 2026/2046

RAC Limited (the Offeror) announces today its invitation to holders of RAC Bond Co plc’s (the Issuer) £600,000,000 4.870 per cent. Class A-2 Secured Notes due 2026/2046 held pursuant to Regulation S under the Securities Act of 1933, as amended and bearing ISIN: XS1404981141 (the Notes), to tender their Notes for purchase by the Offeror for cash (the Offer).

The Offer is being made on the terms and subject to the conditions contained in the tender offer memorandum dated 11 March 2024 (the Tender Offer Memorandum) prepared by the Offeror and is subject to the offer restrictions set out below and as more fully described in the Tender Offer Memorandum.

Copies of the Tender Offer Memorandum are (subject to distribution restrictions) available from the Tender Agent as set out below. Capitalised terms used in this announcement but not defined have the meanings given to them in the Tender Offer Memorandum.

Summary

A summary of certain of the terms of the Offer appears below:

Indicative Timetable for the Offer

This is an indicative timetable showing one possible outcome for the timing of the Offer based on the dates in the Tender Offer Memorandum. This timetable is subject to change and dates and times may be extended or amended by the Offeror in accordance with the terms of the Offer as described in the Tender Offer Memorandum. Accordingly, the actual timetable may differ significantly from the timetable below.

The Offeror may, in its sole discretion, extend, re-open, amend, waive any condition of and/or terminate the Offer at any time (subject to applicable law and as provided in the Tender Offer Memorandum) and the above times and dates are subject to the right of the Offeror to so extend, re-open, amend, waive any condition of and/or terminate the Offer.

Noteholders are advised to check with any bank, securities broker or other intermediary through which they hold Notes when such intermediary would need to receive Tender Instructions from a Noteholder in order for that Noteholder to be able to participate in, or (in the limited circumstances in which revocation is permitted) revoke their Tender Instruction to participate in, the Offer by the deadlines set out above. The deadlines set by any such intermediary and each Clearing System for the submission and withdrawal of Tender Instructions will be earlier than the relevant deadlines set out above and in the Tender Offer Memorandum.

Background and Rationale for the Offer

RAC Bidco Limited and its subsidiaries (the Group) has reported strong performance in 2023 and, combined with recent successful refinancing activity, has decided to announce the Offer.

The purpose of the Offer is to utilise a portion of the Group’s available cash balances to purchase Notes prior to their maturity as part of the proactive management of the Group’s debt capital structure. The Offer will also provide liquidity to those holders whose Notes are accepted in the Offer.

If the Final Acceptance Amount is less than the Target Acceptance Amount (each as defined below), some or all of the cash no longer required will be used for the repayment of senior term debt.

Notes purchased by the Offeror pursuant to the Offer will be cancelled and will not be re-issued or re-sold. Notes which have not been validly offered and accepted for purchase pursuant to the Offer will remain outstanding.

Purchase Price and Accrued Interest

Determination of the Purchase Price

The Offeror will pay for Notes accepted by it for purchase pursuant to the Offer a price (the Purchase Price) to be determined at or around 1.00 p.m. (London time) (the Pricing Time) on 19 March 2024 (the Pricing Date) in the manner described in the Tender Offer Memorandum by reference to the sum (such sum, the Purchase Yield) of: (i) a purchase spread (the Purchase Spread); and (ii) the Benchmark Security Yield.

Subject as described above, the Purchase Price will be determined in accordance with market convention and expressed as a percentage of the nominal amount of the Notes accepted for purchase pursuant to the Offer (rounded to the nearest 0.001 per cent., with 0.0005 per cent. rounded upwards), and is intended to reflect a yield to Expected Maturity Date of the Notes on the Settlement Date based on the Purchase Yield. Specifically, the Purchase Price will equal (a) the value of all remaining payments of principal and interest on the Notes up to and including the Expected Maturity Date of the Notes, with assumed repayment of the principal on the Expected Maturity Date, discounted to the Settlement Date at a discount rate equal to the Purchase Yield, minus (b) Accrued Interest.

Purchase Spread – Modified Dutch Auction Procedure

The Purchase Spread will be determined pursuant to a modified Dutch auction procedure, as described in the Tender Offer Memorandum (the Modified Dutch Auction Procedure). Under the Modified Dutch Auction Procedure, the Offeror will determine, in its sole discretion (but subject as set out below under “Final Acceptance Amount, Priority of Acceptance and Scaling”), following expiration of the Offer, (A) the Final Acceptance Amount (as defined below) and (B) a single Purchase Spread (expressed in basis points) that it will use in the calculation of the Purchase Price taking into account the aggregate principal amount of Notes so tendered in the Offer and the purchase spreads specified (or deemed to be specified, as set out below) by tendering Holders.

The Purchase Spread will not be more than 170 bps (the Maximum Purchase Spread), and will otherwise be the highest spread that will enable the Offeror to purchase the Final Acceptance Amount pursuant to the Offer.

Accrued Interest

The Offeror will also pay an Accrued Interest Payment in respect of Notes accepted for purchase pursuant to the Offer.

Final Acceptance Amount, Priority of Acceptance and Scaling

Final Acceptance Amount

The Offeror proposes to accept for purchase pursuant to the Offer up to £115,000,000 in aggregate principal amount of Notes (the Target Acceptance Amount), although the Offeror reserves the right, in its sole discretion, to accept significantly less than or more than such amount pursuant to the Offer (the final aggregate principal amount of Notes accepted for purchase pursuant to the Offer being the Final Acceptance Amount).

Priority of Acceptance and Scaling

Once the Offeror has determined the Final Acceptance Amount and the Purchase Spread for the Notes, the Offeror will accept Tender Instructions in the following order, subject to possible pro-rata scaling as described below:

Tender Instructions

In order to participate in, and be eligible to receive the Purchase Price and Accrued Interest Payment pursuant to the Offer, Noteholders must validly tender their Notes by delivering, or arranging to have delivered on their behalf, a valid Tender Instruction that is received by the Tender Agent by 4.00 p.m. (London time) on 18 March 2024 (the Expiration Deadline). See “Procedures for Participating in the Offer” in the Tender Offer Memorandum for further information.

Tender Instructions will be irrevocable except in the limited circumstances described in the Tender Offer Memorandum.

-        a Non-Competitive Tender Instruction is a Tender Instruction in connection with which the relevant Noteholder either (i) does not specify a purchase spread for the Notes, or (ii) specifies a purchase spread greater than or equal to the Maximum Purchase Spread. Each such Non-Competitive Tender Instruction, whether falling within (i) or (ii) above, will be deemed to have specified the Maximum Purchase Spread for the tendered Notes; and

-        a Competitive Tender Instruction is a Tender Instruction in connection with which the relevant Noteholder specifies a purchase spread of less than or equal to the Maximum Purchase Spread. Purchase spreads may only be specified in whole number increments of 1 bp below the Maximum Purchase Spread for the purposes of such Competitive Tender Instructions. If a Competitive Tender Instruction specifies a purchase spread that is not a whole number of increments of 1 bp below the Maximum Purchase Spread, the purchase spread shall be rounded down to the nearest whole number, and such Tender Instruction shall be deemed to have specified such rounded figure for the purposes of the Modified Dutch Auction Procedure.

Once the Offeror has determined the final Purchase Spread for the Offer, it will not accept for purchase any Notes tendered at spreads less than the Purchase Spread. Accordingly, if the Company determines that the final Purchase Spread will be the Maximum Purchase Spread, Notes tendered pursuant to Competitive Tender Instructions will not be accepted for purchase pursuant to the Offer.

Tender Instructions must be submitted in respect of a minimum principal amount of Notes of no less than £100,000, being the minimum denomination of the Notes, and may be submitted in integral multiples of £1,000 thereafter. A separate Tender Instruction must be completed on behalf of each beneficial owner. See “Procedures for Participating in the Offer” in the Tender Offer Memorandum for further information.

Announcement of results and pricing

The Company intends to announce a non-binding indication of the levels at which it expects to set the Final Acceptance Amount and the Purchase Spread, and indicative details of any pro rata scaling that will be applied in the event that the Company decides to accept valid tenders of Notes pursuant to the Offer, as soon as reasonably practicable on the Pricing Date.

The Offeror will announce then its decision of whether to accept valid tenders of Notes pursuant to the Offer and, if so accepted, the Final Acceptance Amount, the Benchmark Security Yield, the Purchase Spread, the Purchase Yield, the Purchase Price and details of any pro rata scaling (if applicable) that will be applied to valid tenders of Notes as soon as reasonably practicable after the Pricing Time on the Pricing Date. See “Further Information and Terms and Conditions” in the Tender Offer Memorandum for further information.

Announcements

Unless stated otherwise, announcements in connection with the Offer will be made (i) by publication via the RIS publication section of the website of the Irish Stock Exchange plc trading as Euronext Dublin (https://direct.euronext.com/Announcements/View-Announcements/RIS-Announcements/) and (ii) by the delivery of notices to the Clearing Systems for communication to Direct Participants. Such announcements may also be found on the relevant Reuters Insider Screen and by the issue of a press release to a Notifying News Service. Copies of all such announcements, press releases and notices can also be obtained upon request from the Tender Agent, the contact details for which are below. Significant delays may be experienced where notices are delivered to the Clearing Systems and Noteholders are urged to contact the Tender Agent for the relevant announcements during the course of the Offer. In addition, Noteholders may contact the Dealer Managers for information using the contact details below.

Noteholders are advised to read carefully the Tender Offer Memorandum for full details of and information on the procedures for participating in the Offer.

Barclays Bank PLC (Telephone: +44 20 3134 8515; Attention: Liability Management Group; Email: [email protected]) and HSBC Bank plc (Telephone: +44 20 7992 6237; Attention: Liability Management, DCM, Email: [email protected]) are acting as Dealer Managers for the Offer and Kroll Issuer Services Limited (Telephone: +44 20 7704 0880; Attention: Alessandro Zorza; Email: [email protected]) is acting as Tender Agent.

Questions and requests for assistance in connection with (i) the Offer may be directed to the Dealer Managers and (ii) the delivery of Tender Instructions may be directed to the Tender Agent, the contact details for each of which are set out above.

This announcement is released by the Offeror and contains information that qualified or may have qualified as inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 (MAR), encompassing information relating to the Offer described above. For the purposes of MAR and Article 2 of Commission Implementing Regulation (EU) 2016/1055, this announcement is made by Jo Baker, Director of RAC Limited.

LEI Number: 21380083G17X45ZB3534

DISCLAIMER This announcement must be read in conjunction with the Tender Offer Memorandum.  This announcement and the Tender Offer Memorandum contain important information which should be read carefully before any decision is made with respect to the Offer.  If any Noteholder is in any doubt as to the action it should take, it is recommended to seek its own financial and legal advice, including in respect of any tax consequences, from its broker, bank manager, solicitor, accountant or other independent financial, tax or legal adviser.  Any individual or company whose Notes are held on its behalf by a broker, dealer, bank, custodian, trust company or other nominee must contact such entity if it wishes to tender such Notes pursuant to the Offer. None of the Offeror, the Dealer Managers or the Tender Agent makes any recommendation whether Noteholders should tender Notes pursuant to the Offer.

OFFER AND DISTRIBUTION RESTRICTIONS

The distribution of this announcement and the Tender Offer Memorandum in certain jurisdictions may be restricted by law.  Persons into whose possession this announcement and/or the Tender Offer Memorandum comes are required by each of the Offeror, the Issuer, the Dealer Managers and the Tender Agent to inform themselves about, and to observe, any such restrictions.

United States      

The Offer is not being made, and will not be made, directly or indirectly in or into, or by use of the mails of, or by any means or instrumentality of interstate or foreign commerce of or of any facilities of a national securities exchange of, the United States. This includes, but is not limited to, facsimile transmission, electronic mail, telex, telephone, the internet and other forms of electronic communication. The Notes may not be tendered in the Offer by any such use, means, instrumentality or facility from or within the United States or by persons located or resident in the United States. Accordingly, copies of this announcement, the Tender Offer Memorandum and any other documents or materials relating to the Offer are not being, and must not be, directly or indirectly mailed or otherwise transmitted, distributed or forwarded (including, without limitation, by custodians, nominees or trustees) in or into the United States or to any persons located or resident in the United States. Any purported tender of Notes in the Offer resulting directly or indirectly from a violation of these restrictions will be invalid and any purported tender of Notes made by, or by any person acting for the account or benefit of, a person located in the United States or any agent, fiduciary or other intermediary acting on a non-discretionary basis for a principal giving instructions from within the United States will be invalid and will not be accepted.

Each Noteholder participating in the Offer will represent that it is not located in the United States and is not participating in the Offer from the United States, or it is acting on a non-discretionary basis for a principal located outside the United States that is not giving an order to participate in the Offer from the United States. For the purposes of this and the above paragraph, United States means the United States of America, its territories and possessions (including Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, Wake Island and the Northern Mariana Islands), any state of the United States of America and the District of Columbia.

Italy

None of the Offer, this announcement, the Tender Offer Memorandum or any other document or materials relating to the Offer have been submitted to the clearance procedures of the Commissione Nazionale per le Società e la Borsa (CONSOB) pursuant to Italian laws and regulations.  The Offer is being carried out in the Republic of Italy (Italy) as an exempted offer pursuant to article 101-bis, paragraph 3-bis of the Legislative Decree No. 58 of 24 February 1998, as amended (the Financial Services Act) and article 35-bis, paragraph 4 of CONSOB Regulation No. 11971 of 14 May 1999, as amended (the Issuer’s Regulation). The Offer is also being carried out in compliance with article 35-bis, paragraph 7 of the Issuer’s Regulation. Accordingly, Noteholders or beneficial owners of the Notes that are located in Italy may tender their Notes in the Offer through authorised persons (such as investment firms, banks or financial intermediaries permitted to conduct such activities in Italy in accordance with the Financial Services Act, CONSOB Regulation No. 20307 of 15 February 2018, as amended from time to time, and Legislative Decree No. 385 of 1 September 1993, as amended) and in compliance with applicable laws and regulations or with requirements imposed by CONSOB or any other Italian authority. Each intermediary must comply with the applicable laws and regulations concerning information duties vis-à-vis its clients in connection with the Notes or the Offer.

United Kingdom

This communication of this announcement, the Tender Offer Memorandum and any other documents or materials relating to the Offer is not being made and such documents and/or materials have not been approved by an authorised person for the purposes of section 21 of the Financial Services and Markets Act 2000, as amended. Accordingly, such documents and/or materials are not being distributed to, and must not be passed on to, the general public in the United Kingdom. The communication of such documents and/or materials as a financial promotion is only being made to, and may only be acted upon by, those persons in the United Kingdom falling within the definition of investment professionals (as defined in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the Financial Promotion Order)) or persons who are within Article 43 of the Financial Promotion Order or any other persons to whom it may otherwise lawfully be made under the Financial Promotion Order.

France

The Offer is only being made, directly or indirectly, to qualified investors in the Republic of France (France). This announcement, the Tender Offer Memorandum and any other document or material relating to the Offer have only been and shall only be distributed in France to qualified investors as referred to in L.411-2 1° of the Code monétaire et financier and as defined in Article 2(e) of Regulation (EU) 2017/1129. The Tender Offer Memorandum has not been and will not be submitted for clearance to nor approved by the Autorité des Marchés Financiers.

General

Neither this announcement or the Tender Offer Memorandum constitute an offer to buy or the solicitation of an offer to sell Notes (and tenders of Notes in the Offer will not be accepted from Noteholders) in any circumstances in which such offer or solicitation is unlawful. In those jurisdictions where the securities, blue sky or other laws require the Offer to be made by a licensed broker or dealer and a Dealer Manager or one of its affiliates is such a licensed broker or dealer in any such jurisdiction, the Offer shall be deemed to be made by such Dealer Manager or such affiliate, as the case may be, on behalf of the Offeror in such jurisdiction.

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