Firstgroup is poised to win Britain’s most profitable train franchise if a boardroom coup by its largest investor can be averted this week.
Transport Secretary Chris Grayling will wait until the results of a key vote on Tuesday are known before handing the keys to the
West Coast main line to the troubled rail and bus group.
The London to Glasgow line has netted a joint venture between Sir Richard Branson’s Virgin Trains and Stagecoach tens of millions of pounds since they won the franchise in 1997.
Wall Street hedge fund Coast Capital Management last month launched a campaign to oust half FirstGroup’s board, carve the business in two and jettison rail operations. The overhaul will be put to the ballot on Tuesday, with indications this weekend that it will go down to the wire.
Senior insiders said that votes filed in advance of the meeting suggested roughly two-thirds of shareholders are backing
FirstGroup and rejecting Coast’s appointees. But such votes only represent 60pc of the ballot.
Separate sources said that a number of FirstGroup’s biggest shareholders have yet to finalise voting decisions. Due to the concentration of voting power among small number of investors, the vote could easily swing in Coast’s favour.
The battle to win the prized West Coast rail line, parts of which are scheduled to carry HS2 trains, is one of a string of legal spats between Mr Grayling and rail operators. A bid by Virgin, Stagecoach and France’s state operator SNCF was thrown out by the officials after being deemed “non-compliant”.
Multiple industry sources have told The Telegraph that FirstGroup’s bid, made in conjunction with Italian transport giant Trenitalia, will be awarded the London to Glasgow line. It is battling with a consortium led by Hong Kong underground operator MTR and Chinese state company Guangshen Railway Company, the only other remaining bidder.
Civil servants have advised Mr Grayling that FirstGroup is their “preferred option”, one senior insider said and FirstGroup is the only party to have been brought into the final round talks to iron out finer franchise details. A separate source said that FirstGroup had already engaged headhunters to fill top director positions to run the franchise.
But Whitehall officials have been spooked by the prospect of FirstGroup losing the shareholder vote, which would likely result in the company reneging on its bid and handing the train network into the hands of the Chinese. Industry sources said this could force Mr Grayling into an embarrassing U-turn to restart the bid from scratch.
Such a scenario would represent a new low for the under-fire minister.He is facing four separate legal challenges over the Government’s decision to kick bidders out. Parties are seeking tens of millions of pounds in damages from the taxpayer in compensation for lost bidding costs.
Earlier this year, the Department for Transport paid £33m to settle a case brought by Eurotunnel after it handed a contract to run ferries in the event of a no-deal Brexit. P&O has launched its own action and is seeking a similar amount in compensation.
