FirstGroup taps investors to bring debt below £2 billion

Source: Supply Chain Digital

Date :15/05/2008 12:12:03

FirstGroup, the bus and rail operator, has tapped investors for £236 million to preserve its credit rating and refinance its £1.8 billion acquisition of Laidlaw.

The group’s adjusted operating profit was up 38.9 percent to £360.1 million due to strong passenger revenue and volume growth. The proceeds from fundraising would help bring net debt below £2 billion and fund the deal with the transport company that runs America’s Greyhound buses.

Debts

Net debts have increased significantly at FirstGroup in the last year from £516 million to £2.16 billion, and the company has seen shares drop.

FirstGroup Chief Executive, Moir Lockhead, said, “The main driver was to get our credit rating back. We do a lot of work in the UK and America that is government-related and we couldn’t risk it being cut to below investment grade.”

In the six months since the acquisition of Greyhound it has seen revenues of £280 million. Operating profits in North America rose from £68.2 million to £139.5 million.

The company’s bus division posted a five percent rise in fare revenues to £770.3 million in the year ending March 31, 2008. The rail division reported a ten percent rise in operating profit to £120 million despite problems with First Great Western.

May 15, 2008