FirstGroup completes sale of First Student and First Transit

Thu, 22nd Jul 2021

FirstGroup has completed the sale of First Student and First Transit to EQT Infrastructure, with net disposal proceeds of $3.1bn The net disposal proceeds received by FirstGroup at completion is an increase of $58m over the base amount previously announced, due to the final adjustments for working capital and debt and debt-like items, the company said. The board intends to increase the proposed return of value to shareholders to £500m from £365m. The increased quantum reflects the higher cash proceeds received from the sale, the increased clarity for First Rail resulting from agreement in May 2021 of SWR and TPE National Rail Contracts and the TPE final rail franchise termination sum being c.£50m lower than anticipated, and improving cash flow expectations for the continuing group as a result of further easing of pandemic restrictions in our core UK bus and rail markets. The proposed return of value is expected to be undertaken in the autumn of 2021, with the distribution mechanism to be announced in due course in consultation with shareholders. In addition to the cash consideration received at completion of the sale, the First Transit earnout worth up to $240m was also agreed as part of the sale consideration, under which the Group will receive 62.5% of First Transit's value above $380m, either in three years (following an independent valuation) or sooner in the event that it is sold by EQT Infrastructure to a third party. FirstGroup chairman, David Martin, said: 'This delivers on our strategic objective and creates a focused and stronger business with a bright future. The vital role of public transport in the UK has never been clearer, and with the most supportive policy backdrop in decades coupled with our strong credentials, FirstGroup is in prime position to deliver on its goals with a well-capitalised balance sheet and an operating model that will support attractive dividends.' The company's chief executive, Matthew Gregory, said: 'We have delivered this transformational sale which resolves the group's long-standing legacy liabilities, puts the group in a strong position to benefit from its many opportunities, and releases £500m of value to return to shareholders.' Story provided by

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