Sunday 19 May 2019 City A.M.
http://www.cityam.com/277844/us-investor-urges-first-group-split-and-pull-out
If the existing member store continues to be required to withdraw from a major shareholder,
Can the UK franchise system continue?
http://www.cityam.com/277844/us-investor-urges-first-group-split-and-pull-out
Will this happen?US investor urges First Group to split and pull out of 'destructive' UK rail network.
Activist hedge fund Coast Capital has issued a list of demands against First Group, including that it pull out of Britain's railways, split its UK and US assets and overhaul its board.
Coast, a top ten shareholder in First, has said the group should separate its US assets, which it claims have a "much higher independent valuation" than its UK assets, to generate £3bn in capital that could be used for reinvestment, debt reduction and pension top-ups.
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Coast Capital founding partner James Rasteh has said the existing leadership has "a track record of value destruction and under-performance".
Those it is targeting include chief executive Matthew Gregory and chairman Wolfhart Hauser.
Former chief financial officer Gregory was appointed as chief executive in November after previous boss Tim O'Toole stood down in May 2018 after a £327m annual loss.
Rasteh told City A.M.
that the current form UK franchise contracts meant it was an "offensively destructive business to invest in".
He said there were numerous ways to lose money but "no way to make it".
Up to £10m could be spent on franchise contracts that "actually generate a loss", he said, and "respected" operators such as Stagecoach and National Express have already pulled out.
"Meanwhile First Group continues to plunder capital," he added.
First Group declined to comment.
If the existing member store continues to be required to withdraw from a major shareholder,
Can the UK franchise system continue?
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