Stagecoach buys into toll roads

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STAGECOACH, the acquisitive transport group, yesterday unveiled a major strategic shift by paying out pounds 150m to expand into airport operation and toll roads.

The group is paying pounds 41m to acquire Prestwick International Airport near Glasgow and pounds 107m to take a 28 per cent stake in Road King, a Hong Kong- listed company which develops and operates toll roads in China.

The two deals will significantly expand Stagecoach's activities from its existing interests in the bus and rail markets and put it on a similar footing to National Express, which also has operations covering, rail, road and airports.

The expansion will be financed through a placing and open offering of 15.5 million new shares to raise pounds 160m net of expenses.

In addition to acquiring Prestwick, Stagecoach is forming a new aviation subsidiary dedicated to building up airport operations in the UK and overseas.

Brian Souter, the Stagecoach chairman, said the fund-raising would allow the group to expand into areas of transport where its culture and management could add value.

Stagecoach, which was founded by Mr Souter and his sister Ann Gloag, began as a coach operator in the early 1980s and has since grown into one of Britain's biggest transport groups.

In addition to its bus operations, it also owns South West Trains, the rolling stock leasing company Porterbrook, and a Swedish bus business, Swebus.

Road King, which is registered in Bermuda, operates just under 1,000 kilometres of tolled highways in eight Chinese provinces and made pre- tax profits of pounds 17m in the year to 31 March, 1997.

The Wai Kee group of companies, chaired by William Zen, owns 46 per cent of Road King.

Prestwick made profits of pounds 2.2m on turnover of pounds 21m in the year to 31 March, 1998.

Matthew Hudson, the owner of the airport, will have a 25 per cent stake in the new venture, Stagecoach Aviation, which is being set up to develop the group's interests in secondary airports.

Mike Kinski, who joined Stagecoach as chief executive recently from Scottish Power, will be responsible for the day to day running and development of the airport.

Stagecoach also forecast that profits before tax for the year ended 30 April would be pounds 158m, giving it earnings per share of 48.1p.

The new shares are being placed at 1060p and shareholders will be entitled to apply for two new shares for every 31 they hold.

Stagecoach shares rose 67.5p to close at 1208p.