19th May 2021 15:41
(Alliance News) - FirstGroup PLC's largest individual shareholder again hit out at plans to sell the company's US assets, insisting that the disposal price is below book value and arguing that the transport firm failed to explore better options.
Coast Capital LLC, which owns about a 14% stake in FirstGroup, said the company "failed to fully engage with many dozens of SPAC buyers" in the US. SPACs have "accounted for a majority of asset disposals" in the US, Coast Capital said.
"Needless to say, the board has categorically refused to fully consider transactions other than an outright sale, which would immediately provide much greater upside for shareholders," the New York-based investor added.
FirstGroup agreed a deal in April to sell the assets to Swedish private equity firm EQT AB for up to GBP3.3 billion. The GBP3.3 billion headline enterprise value includes an earnout of up to GBP170 million for First Transit.
Coast Capital argued that when FirstGroup outlined its net proceeds from the sale, it included the earnout, a sum it is not guaranteed to receive.
Coast Capital said the net proceeds of the sale will be GBP2.19 billion, against a September net asset value of GBP2.51 billion.
On Monday, the investor said the proposed deal "is the result of a suboptimal and incomplete process at an inopportune time". What's more, Coast Capital said "long-suffering shareholders" will receive just 12% of the sales proceeds.
In response, FirstGroup on Tuesday said Coast Capital's statement "contains numerous inaccuracies and speculations".
"This process overseen by the board led to the agreed sale for a full strategic value, which looks beyond the pandemic and reflects the high quality and long-term nature of these assets. The group notes that the sale is described by Coast Capital as 'at a significant negative premium to book value', however the net proceeds on sale are above book value as at September 30, 2020," FirstGroup explained.
Coast Capital called on shareholders to reject the deal.
FirstGroup shares were 0.8% higher at 82.75 pence each in London on Wednesday afternoon.
By Eric Cunha; [email protected]
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