Bus flotations to make managers millionaires
Sunday 20 February 1994
The flotations, expected over the next few months, could be valued at more than pounds 100m between them - more than 10 times the price set for their privatisation a few years ago. They are likely to turn key managers into multi-millionaires.
The deregulation of local authority bus services, which began about nine years ago, has created almost 100 independent bus operators. The latest plans for public status have renewed criticism of the Government for selling off public assets in the bus sector too cheaply.
Brian Wilson, Labour's transport spokesman, said the recent history of the bus industry seemed to be 'a textbook example of corruption. Public assets, as has been confirmed by the National Audit Office, were sold off at scandalously low valuations.' GRT Holdings, based in Aberdeen and one of Scotland's biggest operators, was bought out for pounds 5m five years ago by 640 staff and managers. It is considering a float that is likely to value it at about pounds 50m.
The float, sponsored by James Capel, is expected to turn Moir Lockhead, GRT's chairman, and other key executives into paper millionaires.
Managers and staff originally obtained a one-third stake in the business, but their total share has since grown to about 90 per cent with the balance owned by 3i, the venture group, and Abtrust, the investment trust. The company has expanded through acquisition and taxable profits have surged from pounds 1.9m in 1991 to pounds 3.2m for the year ended 31 March 1993.
Ronnie Duncan, managing director, said: 'We are considering several options to raise new finance but have yet to consult our staff. Unlike water or power companies, we are not a monopoly supplier but often face intense competition. As far as GRT is concerned, we have created something that is quite different from what we started with.'
Go Ahead Group, the Gateshead bus company, has appointed Hill Samuel to advise on a stock market float.
The company, run by Martin Ballinger, managing director, was bought out from the National Bus Company in 1987 for pounds 3m and could attract a market value of pounds 40m.
Another group thought to be examining a flotation is Rider Holdings, operating as Yorkshire Rider, which was sold for pounds 20m six years ago in a buy-out backed by County NatWest Ventures and Unity Trust.
Rider, one of Britain's biggest bus companies with a 1,200 fleet, made taxable profits of almost pounds 4m in the year to March 1993 on sales of about pounds 84m.
The three companies are likely to be followed by several others over the next few years due to consolidation of the industry. Last year Stagecoach and Badgerline joined the market.
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