UPDATE: Coast Capital opposing FirstGroup’s American bus sales

Coast Capital, which is based in New York, is said to be planning to oppose the sale of the train and bus group’s American interests because it would receive too little money in the deal. Now they are pressuring FirstGroup to prioritise payouts to shareholders above propping up its ailing pension fund.

Last month First, Britain’s largest train operator, announced the long-awaited sale of its American bus and school bus businesses for £3.3 billion to EQT Infrastructure, a private equity firm. However, £1.1 billion of that is reverting back to EQT to cover liabilities in the United States.

FirstGroup plans to use most of the proceeds to address longstanding liabilities and reduce debts, including repaying about a $415m of emergency government coronavirus loans. It will contribute roughly $466m to its UK pension schemes, while shareholders are in line for a 30p per share payout, totalling about $506m.FirstGroup plans to use most of the proceeds to address longstanding liabilities and reduce debts, including repaying about a $415m of emergency government coronavirus loans. It will contribute roughly $466m to its UK pension schemes, while shareholders are in line for a 30p per share payout, totalling about $506m.

The deal values the businesses at 8.9 times their 2020 earnings before interest, tax, depreciation and amortisation, FirstGroup said. 

The sale refocuses the Aberdeen-based company on its UK business. FirstGroup had launched an auction in March last year but the coronavirus pandemic delayed the process.

First Student is North America’s largest provider of student transport with a fleet of 42,000 buses, while First Transit has 12,500 vehicles. The UK group is yet to sell its struggling US Greyhound intercity coach division.

Source: The Times