FirstGroup shares slump by a fifth as troubled bus and train operator announces £615m fund-raising bid
Chairman steps down after 27 years in the driving seat
The struggling bus and train operator FirstGroup tapped investors for £615 million to cut debts and axed the dividend as profits slumped.
The chairman Martin Gilbert stepped down as chairman after leading the firm for 27 years, as shares slid 22 per cent on news of the deep-discounted rights issue, which comes at a 62 per cent discount to Friday's closing price.
First, labouring under £2 billion debts following its 2007 acquisition of US bus company Laidlaw, needs the funds to avoid its debts being slashed to junk status and incurring an extra £50 million a year in financing costs by 2016.
Its plans to turn around the business were also hit by the West Coast mainline fiasco.
The firm is paying no final dividend for the year to March - where pre-tax profits fell 37 per cent to £172.4 million - and has also scrapped the interim payout for the current financial year.
Gilbert, who earned £191,000 as chairman of First and has led the business since 1995. 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 leading 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 £90.7 million. The company is pulling out of the capital's regulated bus market and selling bus depots to concentrate on bus markets elsewhere in the country.
Chief executive Tim O'Toole said the subsidy cuts had cost the business more than £20 million a year. He said "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 access public transport are accessing a bus."
Investec's John Lawson said: "Today's news should clear the air and reduce the group's debt once and for all, so should help the stock in the longer-term."
Swedish stars ask fans for £195 pledges on crowd-funding website
voicesJust when you thought you could find a man, get married, and have a baby by the age of 35... it turns out you’re too late, says Grace Dent
sportNapoli 2 Arsenal 0: Gunners must now face either Real Madrid, PSG, Bayern Munich, Atletico Madrid or Barcelona in knock-out stages
musicAs Mariah Carey and Noddy Holder rake in the royalties from their classics, why there hasn't been a decent festive hit for 20 years?
theatreAuthor Daniel Rosenthal recalls the mishaps that almost brought the curtain down on the likes of John Gielgud and Diana Rigg
filmFilm producers sue Warner Bros for $75m over Hobbit films
lifeAs the Royal Mail plans to phase out deliveries on two wheels, it's no wonder posties are in a spin
musicThe 21-year-old beat Ella Eyre and Chlöe Howl to win the honour
lifeFull of the joys and want to help your fellow man? December isn't the time to do it
techLuke Blackall reports on precision engineered prams and babygros that monitor your child 24-7
- 1 Nelson Mandela memorial: ‘Bogus’ interpreter made mockery of Barack Obama’s tribute
- 2 It’s shameful that our universities have accepted gender segregation under pressure from the most oppressive religious fanatics
- 3 Kenyan politician Mike Sonko left red-faced after photoshopping himself next to Nelson Mandela
- 4 Exeter to Edinburgh and back in a day: How one fresher's lost bet left him facing a 900-mile round trip
- 5 Selfie at funeral: Cameron squeezes in on Obama snap at Mandela memorial
- < Previous
- Next >
iJobs Money & Business
£77099.84 - £96375.26 per annum + Bonus + Benefits : Harrington Starr: My clie...
£45000 - £60000 per annum + Bonus and Package: Harrington Starr: Trading appli...
£50000 - £60000 per annum + BONUS + BENEFITS: Harrington Starr: A leading prov...
£70000 - £90000 per annum + BONUS + BENEFITS: Harrington Starr: A leading mark...