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First Group: General Discussion

winston270twm

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It nothing has happened its does confirm nothing is happening. If the other two depots were on the way out there would waste time and effort moving stuff in just to ship it back out?

The above reply doesn't make sense.

They are swapping older buses for newer buses with Queens Road, Bolton & Oldham still need to cover their daily pvr requirements. Additionally, how do you know any buyer for the other two depots wouldn't loan First vehicles for a period of time before moving their own in / buying brand new?
 
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Blackpudding

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Clearly you have misread what I have written or just clearly written if off because of my username, which one is it?

Ha! Because I have no idea what your username has to do with anything I posted, it must be one of the first two. I stand by my original post.
 
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Robertj21a

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Clearly you have misread what I have written or just clearly written if off because of my username, which one is it?

Lets reread what I wrote:

what is the fleet like in the other two depots? Surly you would also do other movements if sales are on the cards?

My Question was asking about the fleet other two depots. IE has there been any movement or rejigging that would really raise an eyebrow? Correct Answer from your good self is "NO" not a long windy post, which looks like a dig.

IE no major fleet movements means its very unlikely there getting sold off, for the time being, which is clear to most people.

Well you've certainly succeeded in confusing me !. I don't really understand all of that. Never mind we'll all see what happens eventually.
 

TheGrandWazoo

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Well you've certainly succeeded in confusing me !. I don't really understand all of that. Never mind we'll all see what happens eventually.

It is a little confusing....

My view FWIW, is the first deal has been done with Go Ahead. Obviously and that was based on a certain fleet/asset list so hence the swapping of vehicles.

Any subsequent sales will naturally be based on a revised fleet mix.

As I mentioned re: Rotala and their purchase of First’s Redditch and Kiddy ops, they thought much of the decent non-depreciated fleet was overpriced so they didn’t want it. Instead, they were happy to have older vehicles (think some First e300s were initially loaned) so they could replace them with their own cascaded or new fleet to their preferred spec.

I think OTW is trying to work out what may be happening through the fleet moves but I don’t think that you can.
 

Robertj21a

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It is a little confusing....

My view FWIW, is the first deal has been done with Go Ahead. Obviously and that was based on a certain fleet/asset list so hence the swapping of vehicles.

Any subsequent sales will naturally be based on a revised fleet mix.

As I mentioned re: Rotala and their purchase of First’s Redditch and Kiddy ops, they thought much of the decent non-depreciated fleet was overpriced so they didn’t want it. Instead, they were happy to have older vehicles (think some First e300s were initially loaned) so they could replace them with their own cascaded or new fleet to their preferred spec.

I think OTW is trying to work out what may be happening through the fleet moves but I don’t think that you can.

No, quite. I've no idea how it might work. There's too many permutations.
 

Volvodart

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Coast Capital moves to derail FirstGroup board

https://www.thetimes.co.uk/edition/business/coast-capital-moves-to-derail-firstgroup-board-dd7qdn9qb

Coast Capital moves to derail FirstGroup board
John Collingridge
May 12 2019, 12:01am,
The Sunday Times

DAVID CHESKIN/PA

Most of the board of the ailing bus and rail giant FirstGroup could be ousted under the plans of an activist investor.

The US-based Coast Capital has requisitioned a shareholder vote to call for the replacement of board members, including new chief executive Matthew Gregory, chairman Wolfhart Hauser and five other non-executives. Coast Capital partner James Rasteh said they were all “shades of super destructive to extraordinarily under-qualified”. The investor upped its stake last week to 9.7% and has proposed bringing in Steven Norris, a government minister under John Major in the 1990s, as chairman. It needs the backing of more than 50% of voting investors.

“First has the right board and management in place to run the company,” FirstGroup said.

“We have regularly added new expertise to the board. The board is focused on delivering shareholder value.”
 

winston270twm

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Agreed. Also about time that someone gave the First directors a good kick to get on with things.

Totally, it's been a long time coming, surprised it's took this long!

With Coast Capital now controlling nearly 10% of FGP, I doubt they will simply walk away quietly now.

It looks like this is the year for consolidation, it's looking increasing likely this might be the year the big 5 will become the big 4 with the proposed Arriva sale & potential breakup of First Group.

It’s no surprise. Coast Capital are not about anything other than breaking up First in order to make a quick buck.

That’s just what they do!

Agreed, they will be turning the screws on FGP's board, they will want to install their own team on the board.
 

Jordan Adam

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Just a hypothetical, but it would be quite interesting if a unknown buyer popped out of nowhere and got grabs of sections of both First and Arriva.

Just so long as said buyer isn't from Perth...
 

winston270twm

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Just a hypothetical, but it would be quite interesting if a unknown buyer popped out of nowhere and got grabs of sections of both First and Arriva.

Just so long as said buyer isn't from Perth...

Anything is possible, but I suspect the UK bus markets isn't that attractive to new entrants at present. Buyers are much more cautious due to pension liabilities etc.

You'd have thought that there would be more interest in UK bus as opposed to low margin UK rail from the likes of Abellio etc.
 

TheGrandWazoo

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Anything is possible, but I suspect the UK bus markets isn't that attractive to new entrants at present. Buyers are much more cautious due to pension liabilities etc.

You'd have thought that there would be more interest in UK bus as opposed to low margin UK rail from the likes of Abellio etc.

The issue with bus operations is that they have good cashflow but are capital intensive. Rail is lower margin but it’s the Rosco that has the capital outlay.

Also for likely purchasers, there is the spectre of possible franchising which is more a threat than an opportunity if you are the dominant operator.
 

KendalKing

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Just a hypothetical, but it would be quite interesting if a unknown buyer popped out of nowhere and got grabs of sections of both First and Arriva.

Just so long as said buyer isn't from Perth...
I been thinking along the same lines, for sometime now.
 

Anthony ross

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National express have never been interested in expanding the bus side of the business outside of the midlands since the London operation where sold all them years ago obviously they’ve expanded the coach side of the business with the kings ferry Clarkes of London woods and Stewart’s but the bus side they just seem happy with the Midlands operations and Dundee
 

winston270twm

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National express have never been interested in expanding the bus side of the business outside of the midlands since the London operation where sold all them years ago obviously they’ve expanded the coach side of the business with the kings ferry Clarkes of London woods and Stewart’s but the bus side they just seem happy with the Midlands operations and Dundee

They are interested in expanding the UK bus division, but only at the right price, they will not overpay / take any risks. All NX Group acquisitions have to tick all the boxes set by the BOD. The London sale was in 2009 after the ECML exit and under a different CEO. They were involved in negotiations for the 2013 First Group UK bus sell off's. I would be surprised if they haven't expressed interest in parts of Arriva and potentially some of First Group should more of that come on the market (particularly the better performing ops).
 

overthewater

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There are only a few place NX would want? I doubt first would sell. Arriva a different beast however it looks unlikely someone will buy it to just spilt up.

I do hope the newest member doesn't get the boot...
 

DragonEast

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My personal local dream? Perhaps First's latest recruit can actually achieve the sale of their Chelmsford depot with VP for housing (and make the local council happy, for once). Might that enable them to let go of their hapless south/mid Essex ops? Everyone is waiting for something, more or less patiently. Even Arriva, with a partner in tow, might then complete the missing part of their home counties doughnut that has been outstanding for decades. And we can all focus on developing a sensible bus network for the benefit of passengers, rather than just feeding inflated egos. The Mets have their mayors to sort out the mess, but the rest of the country needs something . . . I'm not sure who needs First though (well barring their pensioners and Head Office, but do they need UKBus)?

May be I'm barking up the wrong tree, but I'd be looking at property disposals not necessarily a going concern.

It isn't just a game of real-life monopoly for overgrown children, fun though it is.
 

Surreyman

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Selective quote from Coast in todays newspapers:

Asked if there was any particular aspect of FirstGroup’s performance that Coast was unhappy with, chief investment officer and founding partner James Rasteh claimed one-third of First Bus routes in the UK are unprofitable, while two of its three rail franchises are running at a loss. He added that First Transit and First Student underperform rival National Express, the second biggest player in these markets behind FirstGroup, by “two or three percentage points”.
 

TheGrandWazoo

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Selective quote from Coast in todays newspapers:

Asked if there was any particular aspect of FirstGroup’s performance that Coast was unhappy with, chief investment officer and founding partner James Rasteh claimed one-third of First Bus routes in the UK are unprofitable, while two of its three rail franchises are running at a loss. He added that First Transit and First Student underperform rival National Express, the second biggest player in these markets behind FirstGroup, by “two or three percentage points”.

Again, this is pretty standard stuff from aggressive corporate raiders and activist investors. Quite a good explanatory article https://www.imd.org/research-knowledge/articles/beware-of-activist-investors/ with this quote

“Investors can try to bring about change in a number of different ways. They might lobby softly behind the scenes stating their intentions in meetings or through letters. The most aggressive attacks can come in the form of loud media campaigns against management in attempt to force their hand through public pressure on specific issues. Either way, the first step is usually to gather a coalition of like-minded investors, such as pension fund or other asset managers, who want to see greater returns on their investments.”

If you read the entire article, you’ll see this is all textbook stuff.
 

winston270twm

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Again, this is pretty standard stuff from aggressive corporate raiders and activist investors. Quite a good explanatory article https://www.imd.org/research-knowledge/articles/beware-of-activist-investors/ with this quote

“Investors can try to bring about change in a number of different ways. They might lobby softly behind the scenes stating their intentions in meetings or through letters. The most aggressive attacks can come in the form of loud media campaigns against management in attempt to force their hand through public pressure on specific issues. Either way, the first step is usually to gather a coalition of like-minded investors, such as pension fund or other asset managers, who want to see greater returns on their investments.”

If you read the entire article, you’ll see this is all textbook stuff.

To be fair, the Coast summing up of FGP business units is pretty much bang on the money. It has for some time underperformed other UK bus groups that operate in similar/the same areas.

In the very least, I expect Coast to install some of it's proposed new board members on to the existing BOD, if not to relieve the pressure off the existing BOD / keep Coast quiet. I seem to remember the same happened with NX Group and it's activist investor.
 

TheGrandWazoo

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To be fair, the Coast summing up of FGP business units is pretty much bang on the money. It has for some time underperformed other UK bus groups that operate in similar/the same areas.

In the very least, I expect Coast to install some of it's proposed new board members on to the existing BOD, if not to relieve the pressure off the existing BOD / keep Coast quiet. I seem to remember the same happened with NX Group and it's activist investor.

Activist investors don’t generally go for performing businesses! Hence they’ll always be a justified level of criticism and no one can say otherwise with FGP.

Of course, you have CC coming in when shares are depressed - they have little to lose and much to gain. Longer term investors - it’s slightly different. Be interesting to see how FGP react.
 

winston270twm

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Activist investors don’t generally go for performing businesses! Hence they’ll always be a justified level of criticism and no one can say otherwise with FGP.

Of course, you have CC coming in when shares are depressed - they have little to lose and much to gain. Longer term investors - it’s slightly different. Be interesting to see how FGP react.

That was my point, i.e. it's been underperforming its peers for along time in pretty much every division. Surprised, it's took this long for an activist investor to rattle the BOD & build such a large stake.

I don't think CC are going to rollover & go away quietly, I think this time something, drastic will come from it, FGP can't continue in its present form, times up!
 

TheGrandWazoo

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That was my point, i.e. it's been underperforming its peers for along time in pretty much every division. Surprised, it's took this long for an activist investor to rattle the BOD & build such a large stake.

I don't think CC are going to rollover & go away quietly, I think this time something, drastic will come from it, FGP can't continue in its present form, times up!
Aurora did the same thing.

Given Hauser and Gregory’s utterings, is be surprised if the status quo is maintained and perhaps that will be their argument. “You don’t need CC - we’re gonna cut out the rail and cleve U.K. from US?”
 

overthewater

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You say that about first or even pm May yet somehow both haven't changed or gone. I starting to learn what we expect to happen doesnt also happen. First could once agian could get out doing nothing.
 

Volvodart

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The other thing cc could be wanting is what they suggested before - the hiving off of the undervalued US operations.
 

Surreyman

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The other thing cc could be wanting is what they suggested before - the hiving off of the undervalued US operations.
We have had this discussion before, What do you sell?
1. - Good performing US operations, use proceeds to pay down debt and Pension deficits in UK, becoming a solely UK (& Ireland)based Co?
2. - Sell (some) UK operations, retain profitable US operations.
If option 2, what do you do with the loss makers/barely profitable operating units?
 

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