Acromas has £700m interest on debts of £6.6bn
AA Insurance’s parent, Acromas, racked up a £458m loss last year after paying out £700m in interest on debt.
The debts of Acromas rose from £6.3bn to £6.6bn. The huge interest payments on debts meant the £241.6m in operating profits was wiped out and the business fell into the red.
The AA, which includes the insurance unit and the roadside recovery business, contributed £883m of the £1.8bn turnover.
In a bright spot, group turnover increased 11% to £1.8bn and pre-tax loss was an improvement on last year’s deficit of £529m.
Acromas was created out of the huge private equity deal involving Charterhouse, Permira and CVC in June 2007, funded by £4.8bn bank borrowings and £1.5bn in shareholder loans.
Charterhouse also owns majority stakes in broking consolidator Giles and credit hire firm Drive Assist, which like Acromas, have a financial situation where interest payments exceed earnings on a pure accounting basis at the last filed accounts.
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