smtglasgow
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Looks like a much more conservative bid than 2012. Always thought they dodged a bullet when Virgin threw their toys out of the pram.
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First Group: General Discussion
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Please use the thread in UK Railway Discussion to discuss the award of the West Coast Partnership. The thread can be found here.
Another new livery for First Leicester:-
https://www.facebook.com/613623182009256/posts/2563344647037090/?app=fbl
https://www.facebook.com/613623182009256/posts/2563344647037090/?app=fbl
Robertj21a
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Yes, but for just one route, not whole operation.
overthewater
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SO I take it if we want to talk about that award we go there, If we want to talk about how it will effect First group as a whole we can stay here?
That is a bit of a strange tie up and could we see more joint bids for other routes? Also could this affect any supposed sell off? If the business is doing better by expanding could this enough to chase away certain board members and curtail any more bus sale offs. I suspect Greyhound for the chop either way?
winston270twm
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How's it going to chase away Coast Capital? CC wanted First Group to quit UK Rail, they're now taking on one of the biggest franchises with undefined pension risks (which Stagecoach thought more sensible not to sign up too....). More likely to antagonize CC.
TheGrandWazoo
Veteran Member
Yep, can't disagree with your take on that. FWIW, Coast were complaining that rail was too capital intensive when it really isn't. You have to have a reasonable amount of working capital but much of the real capital is either NR or RoSCOs. It has traditionally been low margin (which was another CC criticism) but low risk. The issue now, irrespective of Coast's earlier protestations, is the level of risk associated with undefined pension liabilities, and that isn't going to placate Coast but quite the opposite.
They do need to crack on with the divestment of Greyhound, and the separation out of UK Bus. Of the latter, I'm surprised that an IPO isn't the preferred option if only as it's a tidier, simpler process rather than some protracted series of sales, MBOs and ESOPs for every OpCo.
Yep that seems a sensible way to proceed!
I won't pretend to have a full understanding of exactly how an IPO works, but if Firstbus was 'separated out' of Firstgroup, i.e it becomes a separate company in it's own right, what happens to the historic pension obligations of Firstbus and its constituent subsidiaries and predecessors?
Do they remain with Firstgroup or 'migrate' to the new company?
The overused quip about "A large (underfunded) pension fund which happens to operate buses as well", comes to mind.
Of course if the the Pension obligations remain with the 'Old' company, then I can see that an IPO would be a realistic option.
winston270twm
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Both Stagecoach & Arriva have declined to sign up to the undefined pensions risk, both have been excluded from Franchise bids & both are taking the DfT to court, yet First Group who are already in a sticky situation, 'oh go on then.....!' sounds very risky & dangerous to me....
I still a partial flotation (IPO) of the US division on NY Stock Exchange would be the best course of action, sell a smaller stake of the most value division. All seems to have gone quiet on the UK Bus disposal front.
TheGrandWazoo
Veteran Member
The various assumptions and commercials are confidential but would assume that they've made an estimate of the liabilities (how, I don't know) and then low balled the bid in terms of premium payments and growth projections.
Given how long it's taken Arriva to get with their sale, I'm not surprised that there's little news on First and, of course, they'll be making sure they adhere to stock market rules.
This was mentioned at the recent Leicester running day (held at First's depot) as being along the lines of the Worcester Salt Route and Elgar buses which were on display however (if this is the finished thing) it's rather boring by comparison.
TheGrandWazoo
Veteran Member
Quite like the livery but the name is rather uninspiring. The Nimrod ones (as opposed to Elgar) are quite good.
winston270twm
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Arriva's sale seems to be progressing, there's at least 10 interested parties in first round bidding for various parts / job lot.
Robertj21a
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Yes, they had said that they weren't expecting to make much progress until nearer the year end.
TheGrandWazoo
Veteran Member
It was announced on 27th March....
You do not need an IPO to split a listed company. You create FUKB plc and give FG shareholders shares in it, which are then listed on FTSE. They shareholders then have a stake in both companies.
I would expect pension liabilities to go with the business they belong to - UK bus liabilities to FUKB, American liabilities staying with FirstGroup. I don't know what happens to corporate debt - there ought to be an equitable division.
In itself, dividing the company makes no difference. The belief is that separately the companies would do better than together. The alternative to splitting is simply to sell the UKB business to anyone who wants to buy it. How they raise the money is up to them.
I came across this slightly cynical reference to First Group a while ago:
winston270twm
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The original timetable was preferred bidder prior to summer break, that seems to have slipped somewhat.
And?
It's a big complex business, it's going to take time for potential buyers to run over it with a fine tooth comb before deciding to where to pitch their offers & for what. Those offers will then need to be whittled down, it's not like it's it one takeover bid, it's effectively an auction, with not all bids being like for like....
Let's see how long it take for First to dispose of anything substantial.
TheGrandWazoo
Veteran Member
First is also a big complex business. The announcement to split First was over two months after DB made their Arriva statement. These things will take time and so I'm not surprised that we've not heard anything yet after less than three months. However, the clock is ticking so you'd expect some concrete news about UK Bus or Greyhound within the next few months.
winston270twm
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Whilst the First Group UK Bus hiving off was only formerly announced less than three months ago, we all know parts of First Group have been for sale much longer than that, with only the select few potential interested being in the know.
Robertj21a
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A while back there was a report in the German Press about the Arriva sale, where they set out a timetable of possible events. As you say, it had slipped a bit but, seemingly, only due to the volume of interest/queries.
As far as I am aware, first-round bids were due in last week, but they are also looking at an IPO. The DB board meets mid next month to look at things.
Source:-
https://www.bloomberg.com/news/arti...-bahn-is-said-to-eye-amsterdam-for-arriva-ipo
Source:-
https://www.bloomberg.com/news/arti...-bahn-is-said-to-eye-amsterdam-for-arriva-ipo
Last edited:
Robertj21a
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First Group share price largely unchanged, despite the award of the WCML franchise/management contract. That might suggest that any enthusiastic FGP supporters are just as easily outweighed by doubters, and concerns about legal actions, break up plans, management, costings etc etc
TheGrandWazoo
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Think you’re right and too many false dawns
winston270twm
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It's interesting, in that David Martin's expertise lies in UK / European Buses, i.e. the division that First want to sell.
Could this lead to a change in strategy re: retaining UK bus??
That's an idea. Keep the buses and get rid of the rest.
DragonEast
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Sorry? For a long time I've had a problem with seeing any future for their UK Bus unit under First Group ownership. They don't have the resources and (whether because of or as a consequence of is the perennial "chicken and egg") the expertise or any commitment to the business at the top level (and too frequently below).
Perhaps David Martin too saw this immediately when he became acquainted with the business, and quickly withdrew from his involvement with the Coast proposal. However it still leaves the Group with the problem of disposing of UK Bus. And unless we take the view that disposal is something that any Tom Dick or Harry with a bit of bookkeeping experience can handle (which seems to be the thoughts of some) then having a bit of relevant expertise on the Board seems a good thing (at least temporarily). Perhaps Martin (and at least a few of the beleaguered shareholders) think so too? However I doubt even he has a magic wand.
There's something I don't completely understand about the favoured-by-some IPO. How is that guaranteed to deal with the investment famine? Surely it merely passes the parcel? I can see it helps a lot if they've come up with a pensions solution though I wonder whether if like many too-good-to-be-true investment "opportunities" it either saves or sinks the company.
Perhaps David Martin too saw this immediately when he became acquainted with the business, and quickly withdrew from his involvement with the Coast proposal. However it still leaves the Group with the problem of disposing of UK Bus. And unless we take the view that disposal is something that any Tom Dick or Harry with a bit of bookkeeping experience can handle (which seems to be the thoughts of some) then having a bit of relevant expertise on the Board seems a good thing (at least temporarily). Perhaps Martin (and at least a few of the beleaguered shareholders) think so too? However I doubt even he has a magic wand.
There's something I don't completely understand about the favoured-by-some IPO. How is that guaranteed to deal with the investment famine? Surely it merely passes the parcel? I can see it helps a lot if they've come up with a pensions solution though I wonder whether if like many too-good-to-be-true investment "opportunities" it either saves or sinks the company.
TheGrandWazoo
Veteran Member
Very confused about this post.
- The rationale for splitting UK bus is to give them the resources and freedom to continue the move to profitability where it should be, as the woes of the group have continued to act as a drag. Also, they don't have the expertise.... they have a number of very experienced OpCo MDs so not sure what you mean by lack of expertise?
- The line about David Martin withdrawing when he "became acquainted with the business" seems to run counter to him now joining as Chairman.....I can't work out what you mean?
- As for the spinning off as an IPO, the benefits are that First Group naturally get a windfall to go towards their remaining businesses. New UK Bus no longer is constrained by a lack of capital and the requirement to funnel funds back to the main group to prop up dodgy American coaches or onerous Rail contracts. Hence it should have a greater ability to invest.
PS - One thing that I asked a week or so ago in your last post was a comment about First Essex losing fleet to Potteries. Were you referring to the former Park and Ride Eclipses that operated the 22/28? Have they moved as I've not seen that?