Chairman exits as First Group seeks £615m from investors
Tuesday 21 May 2013
First Group’s chairman Martin Gilbert bowed out on a low yesterday as the struggling transport group tapped investors for £615m to cut debts and axed the dividend as profits slumped.
The shares slid 30 per cent on news of the cut-price rights issue, which is at a 62 per cent discount to their Friday close. The business, struggling under £2bn of debt after its 2007 acquisition of the US bus company Laidlaw, needs the funds to avoid the debt being slashed to junk status and incurring an extra £50m a year in financing costs by 2016.
The company is paying no final dividend for the year to March, in which pre-tax profits fell 37 per cent to £172.4m, and has scrapped the interim payout for the present financial year.
Mr Gilbert, who earned £191,000 last year as chairman, has led the business since 1995. He has said he will stand down once a successor is found. But his extensive outside commitments – as founder and chief executive of Aberdeen Asset Management and on the board of BSkyB – have reportedly raised eyebrows among some shareholders as the company struggles.
First’s bus business bore the brunt of rising fuel costs and subsidy cuts as operating profits tumbled by a third to £90.7m. The company is pulling out of London’s regulated bus market and selling depots to concentrate on markets elsewhere in the country. Its chief executive Tim O’Toole said the subsidy cuts had cost the business more than £20m a year. He added: “Our concern right now is less the economy and more government policy. It is critical if the Government is going to have a thriving economy, it recognises that two-thirds of people who use public transport use a bus.”
John Lawson, at Investec, said the news “should clear the air and reduce the group’s debt once and for all, so should help in the longer term”.
- 1 Katie Hopkins attacked me on Twitter — so I reported her to the police for inciting racial hatred
- 2 I might be an MP, but that doesn't stop me fighting sexism with my breasts
- 3 Martha Stewart accuses Snoop Dogg of 'smoking for four hours' during Justin Bieber Roast
- 4 Google April Fools': company unveils backwards search engine and huggable digital assistant
- 5 April Fools' Day 2015: The best hoax news stories from around the internet
Martha Stewart accuses Snoop Dogg of 'smoking for four hours' during Justin Bieber Roast
April Fools' Day 2015: The best hoax news stories from around the internet
April Fools' Day 2015 live: The best pranks and fake stories from around the world
University of Cambridge: Remains of 1,300 scholars are found under building
Turkey power cut: Prime Minister says nationwide blackout could be caused by terrorists
Ukip supporters are 55 or older, white and socially conservative, finds British Social Attitudes Report
Street preacher quoting from the Bible fined for calling homosexuality an 'abomination'
Woman filmed launching racist tirade against men on the Tube for speaking in 'own lingo'
Katie Hopkins attacked me on Twitter — so I reported her to the police for inciting racial hatred
The West has it totally wrong on Lee Kuan Yew
David Cameron calls Labour 'hopeless, sneering socialists' while announcing 7-day NHS plans
iJobs Money & Business
£20000 per annum + commission: SThree: Sthree have an exciting opportunity for...
£18000 - £32000 per annum: Recruitment Genius: A Telesales Executive is requir...
£45000 - £50000 per annum + benefits : Ashdown Group: A highly successful, glo...
£50,000 - £55,000: Neil Pavier: Are you a professionally qualified commercial ...