National Express gets 90 per cent backing for rights issue

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The Independent Online

National Express secured overwhelming support for its £360m rights issue as the Cosmen family backed the move despite public opposition to the strategy, paving the way for a much-needed restructuring of the group.

The bus and rail company announced plans for the heavily discounted capital raising last month, and yesterday secured 90.4 per cent support. The Cosmens, who had opposed the move, spent £74m on taking up their rights to avoid diluting their stake.

A spokesman for National Express said: "The management was happy with the support and can now look forward to the future with confidence."

The successful rights issue brings stability to the group after months of uncertainty. It has fought off several takeover approaches, while losing one of its franchises and its chief executive, with the prospect of breaching covenants on its £1.1bn debt pile.

Andrew Fitchie, an analyst at Collins Stewart, said: "This puts to bed much of the uncertainty, and National Express can now put much of the past six months behind it. Now it just needs to appoint a chief executive."

The Spanish Cosmen family, the largest shareholder with almost 20 per cent of the stock, had tried to hijack the extraordinary meeting, held to authorising the rights issue.

At the time, Jorge Cosmen, deputy chairman of National Express, said there was "an absence of a well-defined strategy" and the rights issue was too large. Sources close to the situation said the family was not opposed to a rights issue in theory, but wanted the company to restructure its debts first. "It was never a question of not taking up their rights, but the Cosmens voted against the proposal last month because they wanted a better strategy. They felt the company was putting the cart before the horse."

A source close to National Express said that despite the opposition "relations with the Cosmens are better. They participated in the rights issue and the situation looks better for the long term". Shortly after the extraordinary meeting, chairman John Devaney said that despite the opposition, Mr Cosmen was "an asset" to the board.

The company rejected a takeover approach by rival FirstGroup in the summer, and held firm despite two subsequent bids from Cosmen-backed consortiums. The group had already lost the East Coast Main Line, which brought Richard Bowker's resignation.

Dean Finch, the head of Tube Lines, has been lined up as a replacement and has until Monday to decide whether to quit the Underground group.