RAC still on course for stock market

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The Independent Online
The RAC, Britain's oldest motoring organisation, confirmed yesterday that it was considering plans for a move to the stock market - just days after ousting its chairman for instigating the same move.

It remains unclear how big windfalls would be for staff and customers should the 101-year-old club switch from mutual status. Under its two- tier membership structure, the six million "members" of the rescue service, who contribute the bulk of profits, do not need to be consulted about conversion.

It was this that provided the outgoing chairman with an opportunity to act. Last week Jeffrey Rose wrote to the 12,000 people who pay pounds 600 a year as full members, pointing out the benefits of demutualisation: they could realise pounds 20,000 for their small investment.

He was fired for acting without consent of the board. The RAC is a highly successful business. The organisation made a pre-tax surplus of pounds 57m in 1996, compared with an pounds 11m deficit the year before, on turnover of pounds 260m. It employs 4,000 staff, including 1,300 patrolmen. Analysts value it at pounds 800m to pounds 1bn, but even this would not mean bumper payouts for the wider membership.

Lawyers are combing the club's constitution to see how a conversion could take place.

The problem for executives is that if 10 per cent of full members opt for an extraordinary general meeting, the board would have to call one. To head this off, the 16-strong committee that runs the RAC has written to all 12,000 full members asking them to "ignore" Mr Rose's invitation; instead, the letter asks that demutualisation be raised at the "proper place", the annual meeting on 20 May.

Edmund King, spokesman for the board, said it wanted to end speculation and "stop carpetbaggers queuing up to join". But the issue of how commercial the RAC, and its slightly younger rival, the Automobile Association, should be will not go away. The AA has been reviewing its activities with the aim of streamlining the businesses in which it is involved. But it says it is committed to being member-owned.

A spokesman said: "We do not have shareholders ... all the money goes back to members."

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