18th May 2021 14:42
(Alliance News) - FirstGroup PLC on Tuesday hit back at a shareholder which called on investors to reject the proposed sale of its First Student and First Transit assets.
Coast Capital LLC, which owns about a 14% stake in FirstGroup, on Monday 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 said the New York-based investment firm'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 30 September 2020," FirstGroup explained.
FirstGroup agreed on a deal in April to sell the assets to Swedish private equity firm EQT AB for up to GBP3.3 billion.
The transport firm added: "In the context of a competitive process to extract the most attractive proposal, an earnout structure was agreed for First Transit which would benefit continuing shareholders in the group. This reflects First Transit’s strong prospects for future performance, not least in light of the Biden administration's commitments to investment in infrastructure and public transportation. Under the earnout FirstGroup will receive up to a further GBP170 million, payable on the third anniversary of the sale."
Coast Capital on Monday said it has been contacted by shareholders "who express frustration with this deal".
FirstGroup on Tuesday said it has "consistently engaged with Coast Capital over several years".
"The board has received financial advice from Rothschild & Co, JP Morgan Cazenove and Goldman Sachs in relation to the sale. The board unanimously recommends the transaction as being in the best interests of all shareholders and recommends shareholders vote in favour of the sale at the general meeting on 27 May," the company added.
FirstGroup shares were 4.0% higher at 83.70 pence each in London on Tuesday afternoon.
By Eric Cunha; [email protected]
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