Proposed equity and debt refinancing

THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED IN IT IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO AUSTRALIA, CANADA, JAPAN, SWITZERLAND, NEW ZEALAND, THE REPUBLIC OF SOUTH AFRICA OR THE UNITED STATES (INCLUDING ITS TERRITORIES AND POSSESSIONS, ANY STATE OF THE US AND THE DISTRICT OF COLOMBIA) OR INTO ANY OTHER JURISDICTION WHERE TO DO SO MIGHT CONSTITUTE A VIOLATION OR BREACH OF ANY APPLICABLE LAW. PLEASE SEE THE IMPORTANT NOTICE AT THE END OF THIS ANNOUNCEMENT.

THIS ANNOUNCEMENT, WHICH DOES NOT CONSTITUTE A PROSPECTUS OR DOCUMENT EQUIVALENT TO A PROSPECTUS, IS NOT AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY SECURITIES AND NEITHER THIS ANNOUNCEMENT NOR ANYTHING HEREIN FORMS THE BASIS FOR ANY CONTRACT OR COMMITMENT WHATSOEVER. SECURITIES MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES ABSENT REGISTRATION OR AN EXEMPTION FROM REGISTRATION AND THE SECURITIES DESCRIBED HEREIN WILL BE SOLD IN ACCORDANCE WITH ALL APPLICABLE LAWS AND REGULATIONS.

25 March 2015

AA plc

("AA" or the "Company")

Proposed equity and debt refinancing

AA plc (the "Company") announces its intention to raise £935 million in aggregate from the issuance of £200 million of equity and the issuance of new Class B Notes to raise £735 million. Along with £209 million cash on the balance sheet, the proceeds from these issuances will be used to refinance the £655 million 9.5% class B notes of AA Bond Co Limited, to redeem £175 million 9.5% senior PIK toggle notes of AA PIK Co Limited and to repay £209 million of AA Senior Co Limited's £663 million Senior Term Facility (the "Refinancing") as well as to pay the redemption premium fees and expenses in connection with the Refinancing.

The Refinancing is expected to result in annual interest savings of approximately £45 million and provide improved flexibility in the capital structure of the Company. Subject to and following the completion of the Refinancing, it is the Company's intention to use its distributable reserves to pay dividends of no less than £50 million for the year ending 31 January 2016 and to pursue a progressive dividend policy thereafter.

The Company proposes to raise approximately £200 million by way of a placing and open offer (the "Placing and Open Offer"). The proposed Placing and Open Offer would comprise, in aggregate, 51,937,501 new ordinary shares at a proposed issue price of 385 pence per new ordinary share on the basis of 3 new ordinary shares for every 32 existing ordinary shares. The proposed issue price would represent a discount of 9.86% to the closing price of 427.1 pence per ordinary share on 24 March 2015. Any placing would be subject to clawback to the extent ordinary shares are validly taken up by qualifying shareholders under the Open Offer. The proposed timetable of principal events is set out below.

It is expected that a prospectus in respect of the Placing and Open Offer will be posted to shareholders with full details of the Placing and Open Offer in due course and a further announcement will be made at that time.

Further to the Refinancing and to the Placing and Open Offer, the Company will today issue a notice of redemption for the outstanding £175 million Senior PIK Toggle Notes, with a proposed redemption date on 24 April 2015.

PROPOSED TIMETABLE OF EVENTS

Notes:

(1) Each of the times and dates set out in the above timetable and mentioned in this announcement is subject to change by the Company, in which event details of the new times and dates will be notified to the UK Listing Authority and, where appropriate, to shareholders.

(2) Any reference to a time in this document is to London time, unless otherwise specified.

The Placing and Open Offer will be conditional upon, among other things, the Company entering into a Placing and Sponsor's Agreement with the proposed joint bookrunners and that agreement becoming unconditional in accordance with its terms.

ENQUIRIES:

DISCLAIMER

This announcement does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any securities of AA plc or any of its subsidiaries (collectively, the "Company") nor shall it or any part of it nor the fact of its distribution form the basis of, or be relied on in connection with, any contract commitment or investment decision in relation to any such matter nor does it constitute a recommendation regarding the securities of the Company. Investors and prospective investors in securities of the Company are required to make their own independent investigation and appraisal of the business and financial condition of the Company and the nature of the securities. Any decision to purchase securities in the context of a proposed offering of securities, if any, should be made solely on the basis of information contained in an offering circular or prospectus published in relation to such an offering.

This announcement is an advertisement and does not constitute a prospectus or prospectus equivalent document. Nothing in this announcement should be interpreted as a term or condition of the transaction. Investors should not subscribe for or purchase any securities in the Placing and Open Offer except on the basis of the information contained in the prospectus to be published shortly or which is incorporated by reference into the prospectus. The prospectus, when published, will be made available on the Company's website and will be available for inspection at: http://www.hemscott.com/nsm.do.

This announcement does not constitute or form part of any offer or invitation to purchase, or otherwise acquire, subscribe for, sell, otherwise dispose of or issue, or any solicitation of any offer to sell, otherwise dispose of, issue, purchase, otherwise acquire or subscribe for, any security in the capital of the Company in any jurisdiction.

Securities of the Company have not been and will not be registered under the United States Securities Act of 1933, as amended (the "Securities Act"), or any state securities laws and may not be offered or sold within the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. No public offering of securities of the Company is being made in the United States. Neither this announcement nor any copy of it may be taken or transmitted into the United States, its territories or possessions or distributed, directly or indirectly, in the United States, its territories or possessions. Neither this announcement nor any copy of it may be taken or transmitted into Australia, Canada, Japan, Switzerland, New Zealand or the Republic of South Africa or to any person in any of those jurisdictions. Any failure to comply with these restrictions may constitute a violation of United States, Australian, Canadian, Japanese, Swiss, New Zealand or South African securities law. The distribution of this announcement in other jurisdictions may be restricted by law and persons into whose possession this announcement comes should inform themselves about, and observe, any such restrictions. Subject to certain exceptions, securities of the Company may not be offered or sold within the United States, Canada, Australia, Japan, Switzerland, New Zealand or the Republic of South Africa or to any national, resident or citizen of the United States, Canada, Australia, Japan, Switzerland, New Zealand or the Republic of South Africa.

 This announcement may include certain forward-looking statements, beliefs or opinions, including statements with respect to the Company's business, financial condition and results of operations. These statements, which contain the words "anticipate", "believe", "intend", "estimate", "expect", "forecast" and words of similar meaning, reflect the Company's directors' beliefs and expectations and involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. No representation is made that any of these statements or forecasts will come to pass or that any forecast results will be achieved. There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by these statements and forecasts. Past performance of the Company cannot be relied on as a guide to future performance. Forward-looking statements speak only as at the date of this announcement and are also provided strictly on an estimate and approximate basis, further the Company expressly disclaims any obligations or undertaking to release any update of, or revisions to, any forward-looking statements in this announcement. No statement in this announcement is intended to be a profit forecast. As a result, you are cautioned not to place any undue reliance on such forward-looking statements.

This announcement has been issued by and is the sole responsibility of the Company. Each of Cenkos Securities plc ("Cenkos Securities"), which is authorised and regulated in the United Kingdom by the Financial Conduct Authority (the "FCA"), Credit Suisse Securities (Europe) Limited ("Credit Suisse") and Morgan Stanley & Co. International plc ("Morgan Stanley"), which are each authorised in the United Kingdom by the Prudential Regulation Authority (the "PRA") and regulated by the FCA and the PRA, is acting for the Company and for no-one else in connection with the contents of this announcement and the Placing and Open Offer and will not be responsible to anyone other than Company for providing the protections afforded to clients of Cenkos Securities, Credit Suisse and Morgan Stanley (together, the "Banks") or for providing advice in relation to the contents of this announcement or any matters referred to herein. The Banks are not responsible for the contents of this announcement.

This announcement has been prepared for the purposes of complying with the applicable law and regulation of the United Kingdom and the information disclosed may not be the same as that which would have been disclosed if this announcement had been prepared in accordance with the laws and regulations of any jurisdiction outside of the United Kingdom.