overthewater
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SO if that share issues fails what will happen?
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First Group: General Discussion
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SO if that share issues fails what will happen?
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winston270twm
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The rights issue shares are being sold at 85p and offered to existing shareholders on the basis they can buy two new shares @ 85p for every 3 existing shares they own up to 7th June.
The ex Rights issue price I quoted at 140p, was once the rights issue has gone through & the additional shares issued i.e. the estimated share price post rights, which obviously First Groups shares have already closed below before the extra shares have been issued. The share price has got someway to fall before it gets to the same price that the rights shares are being offered at
This was quoted from a friend who knows what they're on about, so apologies if I've got the wrong end of the stick though.
From what I can gather, the Theoretical ex-Rights Price (i.e. the price of an ordinary share after the rights issue, assuming all the shares are taken up) is given as 140.5p/share.
Anything lower than this on 10th June (first day of trading after the RI day of 7th June) and the rights issue will have been a failure as the shares have not met the expected value.
From what I can gather, the Theoretical ex-Rights Price (i.e. the price of an ordinary share after the rights issue, assuming all the shares are taken up) is given as 140.5p/share.
Anything lower than this on 10th June (first day of trading after the RI day of 7th June) and the rights issue will have been a failure as the shares have not met the expected value.
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winston270twm
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Pretty much yes, as the share price should stay above the ex Rights price @ 140p, at present its not looking good. A number of people think it could fall as low as 100p, if it does fall that low I think that would attract quite a few buyers for potential recovery. It will be interesting to see if there is any weekend press comment / speculation
Ah, glad to know I am picking up things over a few beers on a Friday night!
I've also head the 100p speculation, with the warning that anything around that value is likely to attract private equity groups who will more than likely split the business up to sort it out...
I've also head the 100p speculation, with the warning that anything around that value is likely to attract private equity groups who will more than likely split the business up to sort it out...
overthewater
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IF ( BIG IF) would a Peg, sell of UK bus as a whole? or would there cut that up aswell?
I'd guess they'd probably split it up as I think they'd struggle to sell it as a whole - anyone who might be interested would probably have problems with the competition authorities.
markie73
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Give it a couple of weeks after June 9th and I bet that First submit cancellations to VOSA for the three remaining services and it will be 'bye bye' to First in Northampton.....
WatcherZero
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The RMT General Secretary who must not be named is demanding Government compensation to First employees who bought company shares.
overthewater
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anyone seen anymore?
FirstGroup chief Tim O'Toole offered to quit with chairman over £2bn debt
Transport firm CEO, who was told by Martin Gilbert to carry on, spearheading courtship of big investors over £615m rights issue
http://www.guardian.co.uk/business/2013/may/26/firstgroup-chief-tim-otoole-offer-quit-debt
FirstGroup's chief executive, Tim O'Toole, will this week visit its biggest institutional investors to secure backing for the troubled transport operator's £615m rights issue, as it emerged that he offered to quit instead of the chairman.
Martin Gilbert announced his resignation last week after the group concluded it could no longer continue struggling with its £2bn debt. Sources close to the company said O'Toole had, in a private conversation, told the chairman he would also consider his position, but Gilbert said he should carry on.
O'Toole will steer First through a £1.6bn programme of investment over the next four years – primarily in renewing its ageing bus fleet. After the west coast mainline fiasco, in which it missed out on the lucrative railway linking Britain's biggest cities, it would be natural to blame rail for its troubles. But the malady that has forced the firm's rights issue was incubated in the mode of transport it knew best: the bus.
The company, which bills itself the "world's largest public transport operator in private hands", began with a small municipally owned bus company in a far corner of Scotland. Formed from a management buyout under privatisation and a merger with south-west England's Badgerline, the new FirstGroup plc was little more than a decade later striking a deal that would make it the biggest player in key US markets – but at a cost that it is finally having to address.
Borrowing billions, First acquired US transport firm Laidlaw in 2007, and now provided 40% of school bus services across the States. But the takeover did not go to plan: attempts to reduce the debt to a manageable sum by hiving off the newly acquired Greyhound coach service to another buyer fell through. The school runs on a 54,000-strong fleet of the yellow buses did not generate the anticipated profits, and First's share price fell while the group's debt burden made the ensuing bumps in the road ever harder to absorb.
The services it runs in about 40 towns and cities in Britain also began to run into trouble. Passengers were deserting deteriorating, clumsily managed services, with routes slashed and fares pushed up, to the point that there were campaigns and protests against the operator in cities such as Bristol. Changes in government grants and support for concessions exacerbated problems in a bus business that had been generally regarded as a safe cash cow, leading to a profits warning last year.
These headwinds and growing questions over the group's debt partly explain why First bid so keenly for the west coast mainline – a bid so high that rival Sir Richard Branson, the Virgin boss, branded it "insanity", though O'Toole has consistently defended it since. Instead of securing the bandage of a lucrative rail franchise, First licked its wounds as the government paused the entire rail franchising programme, a delay that diminished options beyond the long-resisted rights issue – one being considered even when US railwayman O'Toole joined the board four years ago.
What First now describes as an "albatross" was debt that peaked at £2.6bn after the acquisition of Laidlaw. While the debt was being eroded – partly through selling assets – fears that rating agencies would downgrade First's creditworthiness to junk status, piling on financing costs, forced the group's hand.
Douglas McNeill, a director at investment firm Charles Stanley, said: "Pressing on without a rights issue wasn't doomed to failure, but it was risky: when you have a lot of debt you need everything to go well. You're vulnerable to events.
"Had they done it earlier when the share price was higher it would have been less painful, less dilutive for shareholders."
Those shareholders include at least 8,000 FirstGroup staff who have been part of a long-term share buying scheme, and would likewise have seen their nest eggs slashed by a third last week as the share price nose-dived for the second time in seven months. The RMT union said: "Low-paid guards and platform staff have been propping up the share price with a scheme that might see them losing all their money – and now potentially their jobs because of the chaos at the company." First dismissed the union's claims that the schemes had been closed or that jobs were at risk.
The one man who did lose his job, Gilbert, was a director of First running buses in Aberdeen when Sir Alex Ferguson was still managing the local football club, and has overseen a similar transformation in the scope and scale of the business as Fergie at Manchester United. Analysts believe one sacrificial lamb will be enough to appease shareholders, and O'Toole will have some breathing space.
A First spokesman insisted the rights issue, which should be ratified by shareholders on 10 June, is "good news: we can pay down debt, this is a licence to invest and grow, even if the share graph over 24 hours looks terrible – it's what analysts were expecting". McNeill concurs: on First's prospects, he is "optimistic – for the first time in a while".
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FirstGroup chairman: 'I decided a year ago to resign'
The departing chairman of FirstGroup tells Nathalie Thomas about losing the West Coast deal and how he set the transport giant back on the right track .
http://www.telegraph.co.uk/finance/...-chairman-I-decided-a-year-ago-to-resign.html
Asking shareholders to put up £615m in cash is hardly the most discreet way to end a 27-year association with a company. But that is what Martin Gilbert, the chairman of debt-laden bus and rail company, FirstGroup, had to deal with last week.
Gilbert, who is also the chief executive of Aberdeen Asset Management, will step down from the firm he joined back when it was a mere minnow called Grampian Regional Transport after it has completed a £615m rights issue this summer.
FirstGroup’s shares have tumbled 43pc since Monday, when the cash call was announced to avoid a downgrade in its credit rating to junk status – an outcome that would have led to problems when bidding for major government contracts such as rail franchises.
Shareholder groups such as Pirc had previously raised concerns about Gilbert’s ability to devote enough time to FirstGroup, giving rise to suggestions that investors had demanded his resignation as a condition of supporting the fundraising.
But Gilbert, who is also on the board of BSkyB, is philosophical about the whole affair. Sitting in a meeting room at Aberdeen Asset Management, he is relaxed as he discusses the land he recently acquired in his home country of Scotland.
read more from the link..
--- old post above --- --- new post below ---
######################
No16/17 timetable
http://www.northamptonshire.gov.uk/...ns/Documents/Bus Timetables/SM-16-Jun2013.pdf
Here is new uno 21:
http://www.northamptonshire.gov.uk/...s/Documents/Bus Timetables/UNO-21-Jun2013.pdf
To be fair its a better service than Stagecoach since it only take 30mins from the town centre to Rectory farm, Stagey 40mins and First
FirstGroup chief Tim O'Toole offered to quit with chairman over £2bn debt
Transport firm CEO, who was told by Martin Gilbert to carry on, spearheading courtship of big investors over £615m rights issue
http://www.guardian.co.uk/business/2013/may/26/firstgroup-chief-tim-otoole-offer-quit-debt
FirstGroup's chief executive, Tim O'Toole, will this week visit its biggest institutional investors to secure backing for the troubled transport operator's £615m rights issue, as it emerged that he offered to quit instead of the chairman.
Martin Gilbert announced his resignation last week after the group concluded it could no longer continue struggling with its £2bn debt. Sources close to the company said O'Toole had, in a private conversation, told the chairman he would also consider his position, but Gilbert said he should carry on.
O'Toole will steer First through a £1.6bn programme of investment over the next four years – primarily in renewing its ageing bus fleet. After the west coast mainline fiasco, in which it missed out on the lucrative railway linking Britain's biggest cities, it would be natural to blame rail for its troubles. But the malady that has forced the firm's rights issue was incubated in the mode of transport it knew best: the bus.
The company, which bills itself the "world's largest public transport operator in private hands", began with a small municipally owned bus company in a far corner of Scotland. Formed from a management buyout under privatisation and a merger with south-west England's Badgerline, the new FirstGroup plc was little more than a decade later striking a deal that would make it the biggest player in key US markets – but at a cost that it is finally having to address.
Borrowing billions, First acquired US transport firm Laidlaw in 2007, and now provided 40% of school bus services across the States. But the takeover did not go to plan: attempts to reduce the debt to a manageable sum by hiving off the newly acquired Greyhound coach service to another buyer fell through. The school runs on a 54,000-strong fleet of the yellow buses did not generate the anticipated profits, and First's share price fell while the group's debt burden made the ensuing bumps in the road ever harder to absorb.
The services it runs in about 40 towns and cities in Britain also began to run into trouble. Passengers were deserting deteriorating, clumsily managed services, with routes slashed and fares pushed up, to the point that there were campaigns and protests against the operator in cities such as Bristol. Changes in government grants and support for concessions exacerbated problems in a bus business that had been generally regarded as a safe cash cow, leading to a profits warning last year.
These headwinds and growing questions over the group's debt partly explain why First bid so keenly for the west coast mainline – a bid so high that rival Sir Richard Branson, the Virgin boss, branded it "insanity", though O'Toole has consistently defended it since. Instead of securing the bandage of a lucrative rail franchise, First licked its wounds as the government paused the entire rail franchising programme, a delay that diminished options beyond the long-resisted rights issue – one being considered even when US railwayman O'Toole joined the board four years ago.
What First now describes as an "albatross" was debt that peaked at £2.6bn after the acquisition of Laidlaw. While the debt was being eroded – partly through selling assets – fears that rating agencies would downgrade First's creditworthiness to junk status, piling on financing costs, forced the group's hand.
Douglas McNeill, a director at investment firm Charles Stanley, said: "Pressing on without a rights issue wasn't doomed to failure, but it was risky: when you have a lot of debt you need everything to go well. You're vulnerable to events.
"Had they done it earlier when the share price was higher it would have been less painful, less dilutive for shareholders."
Those shareholders include at least 8,000 FirstGroup staff who have been part of a long-term share buying scheme, and would likewise have seen their nest eggs slashed by a third last week as the share price nose-dived for the second time in seven months. The RMT union said: "Low-paid guards and platform staff have been propping up the share price with a scheme that might see them losing all their money – and now potentially their jobs because of the chaos at the company." First dismissed the union's claims that the schemes had been closed or that jobs were at risk.
The one man who did lose his job, Gilbert, was a director of First running buses in Aberdeen when Sir Alex Ferguson was still managing the local football club, and has overseen a similar transformation in the scope and scale of the business as Fergie at Manchester United. Analysts believe one sacrificial lamb will be enough to appease shareholders, and O'Toole will have some breathing space.
A First spokesman insisted the rights issue, which should be ratified by shareholders on 10 June, is "good news: we can pay down debt, this is a licence to invest and grow, even if the share graph over 24 hours looks terrible – it's what analysts were expecting". McNeill concurs: on First's prospects, he is "optimistic – for the first time in a while".
--- old post above --- --- new post below ---
############################################################
FirstGroup chairman: 'I decided a year ago to resign'
The departing chairman of FirstGroup tells Nathalie Thomas about losing the West Coast deal and how he set the transport giant back on the right track .
http://www.telegraph.co.uk/finance/...-chairman-I-decided-a-year-ago-to-resign.html
Asking shareholders to put up £615m in cash is hardly the most discreet way to end a 27-year association with a company. But that is what Martin Gilbert, the chairman of debt-laden bus and rail company, FirstGroup, had to deal with last week.
Gilbert, who is also the chief executive of Aberdeen Asset Management, will step down from the firm he joined back when it was a mere minnow called Grampian Regional Transport after it has completed a £615m rights issue this summer.
FirstGroup’s shares have tumbled 43pc since Monday, when the cash call was announced to avoid a downgrade in its credit rating to junk status – an outcome that would have led to problems when bidding for major government contracts such as rail franchises.
Shareholder groups such as Pirc had previously raised concerns about Gilbert’s ability to devote enough time to FirstGroup, giving rise to suggestions that investors had demanded his resignation as a condition of supporting the fundraising.
But Gilbert, who is also on the board of BSkyB, is philosophical about the whole affair. Sitting in a meeting room at Aberdeen Asset Management, he is relaxed as he discusses the land he recently acquired in his home country of Scotland.
read more from the link..
--- old post above --- --- new post below ---
######################
No16/17 timetable
http://www.northamptonshire.gov.uk/...ns/Documents/Bus Timetables/SM-16-Jun2013.pdf
Here is new uno 21:
http://www.northamptonshire.gov.uk/...s/Documents/Bus Timetables/UNO-21-Jun2013.pdf
To be fair its a better service than Stagecoach since it only take 30mins from the town centre to Rectory farm, Stagey 40mins and First
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winston270twm
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O'Toole is visiting all First Groups major shareholders this week, it will be interesting to see if the majority are prepared to back the rights issue & stick with First Group/O'Toole for the long haul..... it will also be interested to see how the shareprice reacts and whether it hits this magic £1/share price
UK bus was once one of the big profit generators for First Group, if the rights issue gets passed a lot more emphasis / urgency needs to put in to turning UK Bus fortunes around. Including either cutting the loss making divisions once & for all / or pumping some serious money in to them to reverse the decline.
Even with the rights issue, group debt will only be reduced by £215 Million down to £1.764 Billion, I still can't help but think that there may have to be more sizeable disposals across the group to coincide with higher investments levels/improved profitability etc
UK bus was once one of the big profit generators for First Group, if the rights issue gets passed a lot more emphasis / urgency needs to put in to turning UK Bus fortunes around. Including either cutting the loss making divisions once & for all / or pumping some serious money in to them to reverse the decline.
Even with the rights issue, group debt will only be reduced by £215 Million down to £1.764 Billion, I still can't help but think that there may have to be more sizeable disposals across the group to coincide with higher investments levels/improved profitability etc
overthewater
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I do believe the price will bounce up again tomorrow morning, If it does not first really is in trouble.
At this moment of time No clear signs that either First Edinburgh or Deven/Cornwall are on the way out. we waited long enough for some of the other places.
winston270twm
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I'm not so sure it will, the rights issue is only a sticking plaster to give First group a stay of execution from loosing its investment grade status. First have a long hard slog to turn around the performance of its various business and return profit margins back to double digits across the group. The only thing to lift the shareprice will be takeover talk, more than likely coming from a private equity group
That's my point; the loss makers now need dealing with as top priority, either via disposals or through investment/recasting the network of routes/fare cuts etc. This needs to happen alongside squeezing more out of the better performing subsidiaries
overthewater
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What part of the company makes the most money? why don't there want to sell off Greyhound?
Alas First donts see it that way, I still wonder what the losses are this year, I cant see it FSE being back in profit after the £4m losses last year.
First are still doing the old tricks of reducing the PVP to save money on new stock, I cant see how squeezing more out of the better areas will help either.
amcluesent
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Telegraph said:
While it had around £1bn of liquidity, the group faced a downgrade in its credit rating from BBB flat to “junk” status, which would potentially have caused problems when bidding for major contracts such as UK rail franchises.
overthewater
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Is First Group now junk?
overthewater
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What has to happen to drop one step? I cant see the share price being £1 as the main reason?
It's all to do with how the ratings agencies percive the future of the business. Obviously AAA+ rated companies have a good future and are likely to make the investors money, while junk rated companies are unlikely to make investor returns.
Rating is not just from shareprice, no.
Rating is not just from shareprice, no.
overthewater
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Of course if there is no investors the share could drop?
Sandy Drew
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None of the UK listed transport groups have particularly good credit ratings.
winston270twm
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That was pointed out in some of the recent press articles following the First Group rights issue announcement, the large European transport groups have top credit ratings
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Also included are debt ratios against future earnings i.e. turnover & profits etc and the strength of a companies balance sheet.
Its rated similar to our own personal credit ratings....
--- old post above --- --- new post below ---
If First Group do get downgraded to junk as loose its investment grade credit rating they run the risk of being excluded from bidding for any future rail franchises and it will also increase their borrowing costs, I think by £50 Million was quoted
overthewater
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So a Take over by a peg, But would a sell off raise the capital to pay off debt and make a return?
winston270twm
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Divisional results (From First Groups full year results 2012/13)
Turnover Profit % Margin
First Student 1,503.1 109.9 7.3
First Transit 814.6 49.1 6.0
Greyhound 647.1 52.0 8.06
UK Bus 1,128.2 90.7 8.0
UK Rail 2,795.1 63.2 2.3
Total Group 6,900.9 335.4 4.9
It depends on how you look at it, Greyhound has pipped UK bus to the post for earning the highest percentage profit margin at 8.06% & 8% - however last year UK bus earned 11.6% margins & Greyhound 7.7%
First Student earns First Group the most profit in millions @ £109.9 Million, but its margin is 7.3% (last year 6.8%), last year it was UK bus the earned First Group the most at £134.4 Million
It's the UK that is holding back First Groups profits i.e. UK bus this year was £90.7 Million (£134.4 Million in 2011/12) a fall of £43.7 Million and UK Rail £63.2 Million (£110.5 Million in 2011/12) a fall of £47.2 Million respectively. That's a £91 Million fall in total.
(Sorry, the table of figures doesn't display in the post as it should in draft - the figures quoted are turnover / profit / % margin in that order)
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I think that's the only likely takeover scenario, don't think there is a European transport group big enough to take on First as a whole.
Its the debt levels that have wiped the value off First Group, before the credit crunch and debt wasn't seen so much of a problem First Group shares hit £8+ based on the current number of shares in issue.
Even thought its underperforming compared with previous years, I still think UK bus alone is worth £1-1.2 Billion
tbtc
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winston270twm
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You'd think First would transfer the remaining routes from Dagenham to Stagecoach London a few months early so they can close & sell off the depot now
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Certainly will, UK Rail franchises are great for increasing turnover, but they don't generate high profit margins. They do also provide increased cash flow to the group though