First Group: General Discussion

[Jeni]

Now delayed again until 16 August.

Perhaps only a minor consideration, but in the latest N&P:

HARDEEP KHAKH T/A CITY LINE TRAVEL, BRITANNIA WORKS, UNIT 2-3, 2-4 BRIDGE STREET SOUTH SMETHWICK B66 3DR
From: Redditch Bus Station
To: Redditch Bus Station
Via:
Name or No: 57/58
Service Type: Normal Stopping
Effective Date: 26-Sep-2013
Other Details: Mondays to Saturdays.

Perhaps with imminent competition now they may want to look at some aspects of their findings again.

 

[overthewater]

Why does that come as no surprise....

Let's just say pec buys first ,sells off us and even 25%in Denmark etc , pay off the debt

Well there just keep hold of the UK bus and sell it off in a oner?
Where would the share money from the recent sell off go to? Would the still go to investment?

 

[winston270twm]

Perhaps only a minor consideration, but in the latest N&P:



Perhaps with imminent competition now they may want to look at some aspects of their findings again.

The arrival of some competition in the 57 will certainly do Diamond's case no harm in the final Oft decision
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Why does that come as no surprise....

Let's just say pec buys first ,sells off us and even 25%in Denmark etc , pay off the debt

Well there just keep hold of the UK bus and sell it off in a oner?
Where would the share money from the recent sell off go to? Would the still go to investment?

I'm pretty sure First no longer own anything in Denmark, they sold their stake sometime ago.

Private Equity group would no doubt sell the lots in whatever form it can raise the most money from, to sell First UK bus off in one hit, there is really only NX Group that would face little or no competition concerns or Go-Ahead Group now First no longer have a London operation, but Go-Ahead would have problems with the competition authorities in Plymouth, Eastern Counties & Southampton

Any money raised by the recent rights issue would ultimately go to the PEG, but would have to be reflected in the takeover price for shareholders to approve

 

[Surreyman]

Private Equity group would no doubt sell the lots in whatever form it can raise the most money from, to sell First UK bus off in one hit, there is really only NX Group that would face little or no competition concerns or Go-Ahead Group now First no longer have a London operation, but Go-Ahead would have problems with the competition authorities in Plymouth, Eastern Counties & Southampton

Any money raised by the recent rights issue would ultimately go to the PEG, but would have to be reflected in the takeover price for shareholders to approve

Much as I would love to see First group taken over by a 'PEG', this assumes a number of scenarios: -
1. US operations sold off and used to pay down debt - this would strengthen the UK operations which I for one would not want to see.
2. All parts of First 'auctioned off' with the 'PEG' making a handsome profit - this assumes that the parts are worth more than the whole? Anyone hazard a guess??
The (individual operating units of the)bus companies could be sold individually to the highest bidders.
The competition authorities would prevent the other 'big-boys' from acquiring units adjacent to their existing operations but if you factor in Transdev/RATP/Tower/Abeilo/Rotala plus bids from outsiders then there is no reason why the whole First bus operation could not be disposed of.
3. A third scenario could see Firstbus UK reduced down to the profitable bits with a long term future in Urban areas and possibly rebranded, this would include Aberdeen, Glasgow, Manchester, West & South Yorkshire, South Wales, Bristol/Bath, Southampton/Fareham/Portsmouth and South Essex.

 

[WatcherZero]

Would be very hard to sell the rail franchises as well, since they have quite rigorous requirements for parent companies.

Its likely they just think that if they sell off the US assets they can recover the price they pay for First Group then sit on the UK assets for a few years or try and get its debt down enough to increase its resale value alongside some aggressive cost cutting. Whether theres still fat that can be cut in the UK bus business without leaving the company a dead man walking that will fall over after a couple of years is debatable but they wouldnt be encumbered by shareholder concern about radical shrinking of the company and revenues to a more profitable core that was attractive for resale. The board of Firsts problem was they never really wanted to do the asset sales, it was forced on them by their high debt and unwillingness to accept a shrinking of their empire at home or abroad.

 

[overthewater]

unwillingness to accept a shrinking of their empire at home or abroad.

Then the people at first needs said head look at, how can anyone justify wasting money year on year plugging black holes in accounts? I dont understand what the concerns would be, if first was reduced in size mainly getting rid off dead end operations, that could only be good?

Companies did look at:

* Cumbernauld,
* First Scotland East
* Plymouth

And no one wanted the buy any parts of them, I dare say Cumbernaul at least was beyond saving? instead it ever unclear what will happen to the latter two.

Transdev would only for certain parts while Rotala I doubt there could afford to buy anything? I would watch out for Go ahead, there might make a move in East Anglia, I would not put anything past them for Manchester or even Glasgow, I could see stagecoach eyeing up Leeds.

 

[winston270twm]

Then the people at first needs said head look at, how can anyone justify wasting money year on year plugging black holes in accounts? I dont understand what the concerns would be, if first was reduced in size mainly getting rid off dead end operations, that could only be good?

Companies did look at:

* Cumbernauld,
* First Scotland East
* Plymouth

And no one wanted the buy any parts of them, I dare say Cumbernaul at least was beyond saving? instead it ever unclear what will happen to the latter two.

Transdev would only for certain parts while Rotala I doubt there could afford to buy anything? I would watch out for Go ahead, there might make a move in East Anglia, I would not put anything past them for Manchester or even Glasgow, I could see stagecoach eyeing up Leeds.

I suspect First received offers for various parts of the UK bus operations that they wanted to dispose of and profitable operations they wanted to keep. I suspect the biggest stumbling block was always going to be the price they would let the operations go for, after all buyers knew First were desperate for cash, so they were not exactly going to offer top dollar. There seems to be a number of instances where deals were close then talks broke down

 

[Tomonthetrain]

Do you have the case Oft reference? I couldn't find it on there site the other day

It could be because Diamond will have some competition in Redditch from 26th Sept from a new operator

PD1107088/1 - HARDEEP KHAKH T/A CITY LINE TRAVEL, BRITANNIA WORKS, UNIT 2-3, 2-4 BRIDGE STREET SOUTH, SMETHWICK, B66 3DR

Registration Accepted
Starting Point: Redditch Bus Station
Finish Point: Redditch Bus Station
Via:
Service Number: 57
Service Type: Normal Stopping
Effective Date: 26-SEP-2013
Other Details: Mondays to Saturdays.

That won't be enough competition IMO for the OfT to clear Redditch. Kiddy I could see going through because of EYMS (Whittles) competing against Diamond there on a virtually network level competition...but redditch I think will struggle!

 

[winston270twm]

That won't be enough competition IMO for the OfT to clear Redditch. Kiddy I could see going through because of EYMS (Whittles) competing against Diamond there on a virtually network level competition...but redditch I think will struggle!

I now think the most the Oft will do regarding the former First Redditch operation is make Diamond/Rotala sign up to undertakings re: fare hikes, frequency reductions, service provisions etc I'd be very surprised if the Oft now made Rotala divest the business

 

[317 forever]

3rd attack on First Devon in 3 days - Plymouth Citybus are going to start serving Torpoint in October.... This is in addition to their competing service to Tavistock, and Stagecoach's newly announced Gold Service to Torquay

I think that Go-Ahead were willing to buy out parts of First Plymouth to the north and west, and Stagecoach parts to the east. However, either lack of agreement over price, or concerns of OFT interferance, discouraged such deals from materialising. So Go-Ahead and Stagecoach have decided to introduce parellel servies anyway in the hope of First withdrawing.

 

[winston270twm]

Has anyone seen anything in the weekend press regarding PEG takeover speculation surrounding First Group?

 

[WatcherZero]

Beyond the rumour last week no. Couple of stories though, outgoing Chairman Martin Gilbert has sold a 1/3rd of his shares he aquired via the discounted offering making a £52,000 profit, the offering itself was 87.6% subscribed so they didnt quite raise the full amount from discount sale.

 

[TheGrandWazoo]

Beyond the rumour last week no. Couple of stories though, outgoing Chairman Martin Gilbert has sold a 1/3rd of his shares he aquired via the discounted offering making a £52,000 profit, the offering itself was 87.6% subscribed so they didnt quite raise the full amount from discount sale.

Wasn't the rights issue underwritten so they have got the money??

 

[winston270twm]

Wasn't the rights issue underwritten so they have got the money??

Yes it was, it is the underwritters which have had to sell on the surplus shares not taken up

 

[WatcherZero]

Wasnt sure if it was 100% underwritten but looking it up yes it was, spread across four banks.

 

[winston270twm]

First Group shareprice moving up nicely, currently at 117.4p (up 2.4%) Mkt Cap £1.414 Billion, no doubt being supported by recent PEG bid rumours.

Do the majority realistically think a bid will be forthcoming? Or will First make it alone?

 

[TheGrandWazoo]

First Group shareprice moving up nicely, currently at 117.4p (up 2.4%) Mkt Cap £1.414 Billion, no doubt being supported by recent PEG bid rumours.

Do the majority realistically think a bid will be forthcoming? Or will First make it alone?

A private equity break up? Might struggle to see where the value is?

Yes, the US operations are ok (esp. Transit) in terms of margin. However, where's the worth of the business. More intangible that actual? Rail is a good point - turns over a lot but little in terms of assets and low margin. Transit is better margin but isn't that fairly asset light as well? Therefore, the worth of the business is actually how much?

UK bus and US Student probably have the most assets and I guess that they could sell and lease back the vehicles and whichever property assets that they haven't already done that with.

In truth, depends on what the offer is?

 

[overthewater]

A private equity break up? Might struggle to see where the value is?

Yes, the US operations are ok (esp. Transit) in terms of margin. However, where's the worth of the business. More intangible that actual? Rail is a good point - turns over a lot but little in terms of assets and low margin. Transit is better margin but isn't that fairly asset light as well? Therefore, the worth of the business is actually how much?

UK bus and US Student probably have the most assets and I guess that they could sell and lease back the vehicles and whichever property assets that they haven't already done that with.

In truth, depends on what the offer is?

Lease back 1/3 of the fleet which is not even DDA and will need to get replaced? If that does happen there really is no hope!

I still believe the PEG rumors has come about Just to help push the shares back up to some sort of decent value!

 

[winston270twm]

Looks as though Finglands fleet is going to be replaced with some/all brand new buses in the form of the following:

21 x B7RLE/Wright diverted from FWY (Bradford & Leeds) 69667-87

Plus possibly 21 x Wright Streetlite Max 63096-63116 due for First Manchester are/were understood to be going to the former Finglands Rusholme depot prior to any mention of the B7RLE.

Whilst it looks promising that First are intending to start the Finglands operation off with brand new buses from day one, what about the op's where buses have been diverted from? what is now intended to replace the non DDA compliant buses that the above were due to allow to be withdrawn?

 

[overthewater]

Another order will go in to replace said buses, of course this will take time.

 

[Surreyman]

Looks as though Finglands fleet is going to be replaced with some/all brand new buses in the form of the following:

21 x B7RLE/Wright diverted from FWY (Bradford & Leeds) 69667-87

Plus possibly 21 x Wright Streetlite Max 63096-63116 due for First Manchester are/were understood to be going to the former Finglands Rusholme depot prior to any mention of the B7RLE.

Whilst it looks promising that First are intending to start the Finglands operation off with brand new buses from day one, what about the op's where buses have been diverted from? what is now intended to replace the non DDA compliant buses that the above were due to allow to be withdrawn?

So an all single deck replacement fleet for what was a mostly double deck operation - that says something!
Looks like West Yorkshire & Manchester are going to have to keep some older buses for a little while longer - passengers are going to think First run a fleet of old buses, no change there then!
Anyway they have another 2-3 years to replace non DDA buses.
Stagecoach/Arriva/Go Ahead would do the same thing.

 

[overthewater]

So an all single deck replacement fleet for what was a mostly double deck operation - that says something!
Looks like West Yorkshire & Manchester are going to have to keep some older buses for a little while longer - passengers are going to think First run a fleet of old buses, no change there then!
Anyway they have another 2-3 years to replace non DDA buses.
Stagecoach/Arriva/Go Ahead would do the same thing.

Im sure there could get the extra buses built over the next 6 months,
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Jeroen Weimar ‏Twitter
In London to prepare for a full and frank strategy debate tomorrow. Going to shape our plans for the next 5 years.

 

[winston270twm]

So an all single deck replacement fleet for what was a mostly double deck operation - that says something!
Looks like West Yorkshire & Manchester are going to have to keep some older buses for a little while longer - passengers are going to think First run a fleet of old buses, no change there then!
Anyway they have another 2-3 years to replace non DDA buses.
Stagecoach/Arriva/Go Ahead would do the same thing.

I can't help feeling this Finglands acquisition & a potential bus war with Stagecoach Manchester on the Wilmslow & Oxford Rd corridors will prove to be a big distractions for First. They should concentrate on tidying up their backyards before moving in to new areas......

First have until 31st Dec 2014 (16 months) to remove any none DDA compliant single deckers from their fleets, of which there are numerous.......

 

[Volvodart]

I can't help feeling this Finglands acquisition & a potential bus war with Stagecoach Manchester on the Wilmslow & Oxford Rd corridors will prove to be a big distractions for First. They should concentrate on tidying up their backyards before moving in to new areas......

First have until 31st Dec 2014 (16 months) to remove any none DDA compliant single deckers from their fleets, of which there are numerous.......

How many? Remember First were buying DDA compliant buses earlier than the likes of Stagecoach who were not. The date you quote is for minibuses. The majority of First single deckers have until 1 January 2016. First said at the end of last year that they were on track to meet the DDA requirements and since then there has been the rights issue which will be partly used to accelerate the fleet replacements.

 

[Surreyman]

I can't help feeling this Finglands acquisition & a potential bus war with Stagecoach Manchester on the Wilmslow & Oxford Rd corridors will prove to be a big distractions for First. They should concentrate on tidying up their backyards before moving in to new areas......

First have until 31st Dec 2014 (16 months) to remove any none DDA compliant single deckers from their fleets, of which there are numerous.......

Stagecoach buy Bluebird in North Manchester, First buy Finglands in South Manchester, both acquisitions keep the Oft happy, I don't know what you mean by 'tidying up their own backyards?
Neither company would be allowed to acquire any other companies in their existing areas of operation, the Oft would not allow it.
Stagecoach run a very well run and efficient operation in Manchester, First, well I am a self confessed 'First detester' and would like to see them shrink and decline but even I acknowledge that they are improving their Manchester operations.

 

[winston270twm]

How many? Remember First were buying DDA compliant buses earlier than the likes of Stagecoach who were not. The date you quote is for minibuses. The majority of First single deckers have until 1 January 2016. First said at the end of last year that they were on track to meet the DDA requirements and since then there has been the rights issue which will be partly used to accelerate the fleet replacements.

Yes apologies, getting my dates confused, had it in my head that there were two years between single & double deckers.

Do you have any idea where First's DDA compliant single deckers start from
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Stagecoach buy Bluebird in North Manchester, First buy Finglands in South Manchester, both acquisitions keep the Oft happy, I don't know what you mean by 'tidying up their own backyards?
Neither company would be allowed to acquire any other companies in their existing areas of operation, the Oft would not allow it.
Stagecoach run a very well run and efficient operation in Manchester, First, well I am a self confessed 'First detester' and would like to see them shrink and decline but even I acknowledge that they are improving their Manchester operations.

I personally think First should focus on improving the performance at their existing operations and defend those, before making any acquisitions & potentially starting a bus war with Stagecoach in south Manchester. It's just going to be a distraction and I'm pretty sure I know who will come out on top......

 

[tbtc]

I personally think First should focus on improving the performance at their existing operations and defend those, before making any acquisitions & potentially starting a bus war with Stagecoach in south Manchester. It's just going to be a distraction and I'm pretty sure I know who will come out on top......

See also the "Duck" 22 from Rotherham to Barnsley every ten minutes with 55 plate B7RLEs (cheap fares to compete with Stagecoach) whilst there are dozens of R-reg B10BLEs in South Yorkshire on their last legs - First would rather compete with Stagecoach to Barnsley than tackle the problems in their back yard.

 

[winston270twm]

See also the "Duck" 22 from Rotherham to Barnsley every ten minutes with 55 plate B7RLEs (cheap fares to compete with Stagecoach) whilst there are dozens of R-reg B10BLEs in South Yorkshire on their last legs - First would rather compete with Stagecoach to Barnsley than tackle the problems in their back yard.

That is exactly my point, if UK bus was in better shape then fine, but they have enough to sort out with their current business without starting a bus war with Stagecoach in south Manchester. They didn't respond to Stagecoach in Northampton instead packing up & moving on, some might say this was always the plan.

It will be interesting to see how First respond to Stagecoach & Plymouth Citybus advances in Plymouth, especially as Plymouth has seen few new buses for years other than for Park & Ride contracts

 

[TheGrandWazoo]

That is exactly my point, if UK bus was in better shape then fine, but they have enough to sort out with their current business without starting a bus war with Stagecoach in south Manchester. They didn't respond to Stagecoach in Northampton instead packing up & moving on, some might say this was always the plan.

It will be interesting to see how First respond to Stagecoach & Plymouth Citybus advances in Plymouth, especially as Plymouth has seen few new buses for years other than for Park & Ride contracts

This does pre-suppose that there is going to be a bus war in Manchester? Might just be an opportunistic purchase and that the actual routes, fares and frequencies remain the same?

Agree that the really interesting area is now South Devon and how the new MD of First deals with PCB and Stagecoach incursions. The First operations are characterised by a lot of ageing Darts (R/S reg), some very elderly Olympians (even K reg) and then a number of vehicles from around 2000-2002 comprising B6LEs and Tridents.

There is talk that Somerset is about to get some low floor deckers (must be cascaded) so wonder if there might be some of the Tridents heading there, and some newer kit to Plymouth. Can't imagine new vehicles going there though

 

[overthewater]

Changes are on the way in Essex and around Ipswich it seems, so First are still responding in certain areas.

Are any new buses due for the following places?

* First Scotland East ( badly needs single deckers, but the best it can be done is T reg Deckers from Glasgow.)
* Leicester
* York

I did make this point earlier, Uk bus are only spending the money where it get the best returns, thus area like Scotland east etc are not getting new buses etc because it not cost effective, i cant see South Devon getting the investment because of this point. First will stick to better areas and transfere the fleet to other areas........... It just sounds like what it used to do....