23rd Jun 2006 07:22
Stagecoach Group PLC23 June 2006 23 June 2006 Stagecoach Group plc Disposal of London Bus operations Stagecoach Group plc ("Stagecoach") is pleased to announce that it has agreed tosell its London bus ("Stagecoach London") operations to Macquarie Bank Limited("Macquarie"). The sale is subject to regulatory approval and other closingconditions, and at the present time Stagecoach anticipates that the sale willcomplete within three months. The total proceeds for the sale are £263.6m in cash, subject to adjustmentsdependent on the net assets of Stagecoach London at completion. Stagecoach'sconsolidated gain on disposal is estimated at £120.0m although the gain willdepend on the final determination of the net assets of Stagecoach London atcompletion of the sale. The gross assets subject to the transaction wereapproximately £171.2m as at 30 April 2006. Stagecoach London comprises two companies that provide bus services on routeswithin and from London, principally under contract from Transport for London. The unaudited profit before tax for the year ended 30 April 2006 from the assetssubject to the transaction was £17.9m. Stagecoach London is estimated to accountfor approximately £224.6m of the unaudited revenue and £23.6m of the unauditedoperating profit of Stagecoach's UK Bus division for the year ended 30 April2006. The operating profit is exclusive of any allocation of UK Bus divisionaloverheads. Stagecoach London will establish a new defined benefit pension scheme. Theliabilities of the Stagecoach Group Pension Scheme attributable to StagecoachLondon members will be transferred to the new scheme. A proportion of the assetsof the Stagecoach Group Pension Schemes will also be transferred to the newscheme. Stagecoach will make additional cash contributions as part of thesearrangements (estimated at £60.0m). The deficit of the Stagecoach Group Pension Scheme (as measured on the basis ofFinancial Reporting Standard 17 before taking account of deferred tax) willreduce by an amount approximately equal to the additional cash contributions. The proceeds of the disposal, after making the additional pension contributions,will initially be used to reduce borrowings. The management team of Stagecoach London led by Nigel Barrett (Managing DirectorDesignate) will remain with Stagecoach London under its new owner. Stagecoach's business strategy remains focused on organic growth in its busoperations, exploring the potential for complementary bolt-on acquisitions, andselectively targeting new rail opportunities to deliver further value toshareholders. Following the disposal, the UK Bus division will focus on the bus market outsideLondon where it is pursuing a successful growth strategy. Over the last year,Stagecoach has completed the acquisition of significant bus operations inMerseyside, Yorkshire, Lincolnshire and Tayside. The Group believes the UK busmarket outside London has scope for further growth in an environment whereStagecoach can capitalise on its industry leadership, entrepreneurial flair andinnovation. Brian Souter, Stagecoach Group plc Chief Executive, commented: "The London busoperations have been a highly successful part of Stagecoach's UK Bus divisionsince 1994. After assessing Macquarie's offer and the prospects for the Londonbus operations, we concluded that the disposal was in the best interests of ourshareholders. "The sale of the London bus business will allow us to focus on our successful UKbus growth strategy outside London, where we have demonstrated our strength indelivering innovation, investment and strong marketing. We will continue to lookfor further organic growth and bolt-on acquisition opportunities in our UK andNorth American bus business and opportunities to grow our rail portfolio." CONTACTS: Telephone Stagecoach Group plc Martin Griffiths, Finance Director 01738 442 111Steven Stewart, Head of Media & Public Affairs 01738 442 111 Smithfield John Kiely 020 7360 4900 Notes to editors: Stagecoach Group is a leading international transportation group, with extensivebus and rail operations in the UK and North America. The Group's businessesoperate around 13,000 vehicles and rolling stock, and employ around 30,000people. Stagecoach currently operates more than 8,000 buses and employs around 20,000people at its UK Bus division, which includes 20 regional operating companies.Its network stretches from south-west England to the Highlands of Scotland,covering major cities such as London, Manchester, Liverpool, Newcastle,Sheffield, Hull, Oxford and Cambridge, as well as key shire towns and ruralareas. Stagecoach London provides bus services on routes within and from London,principally under contract from Transport for London. It operates around 1,300buses and employs around 4,300 staff. Macquarie will acquire from Stagecoach Bus Holdings Limited (a wholly ownedindirect subsidiary of Stagecoach), the entire share capital of East London Bus& Coach Company Limited and South East London & Kent Bus Company Limited.Macquarie will also acquire from SCOTO Limited (a wholly owned indirectsubsidiary of Stagecoach), the interests of SCOTO Limited in certain of theproperties operated by Stagecoach London. The sale is conditional on the approval of Transport for London. Stagecoach will continue to provide certain administrative and other services toStagecoach London for a transitional period of at least twelve months and willpermit Stagecoach London to use the Stagecoach name under licence for a limitedperiod. The Macquarie Bank Group is a diversified international provider of specialistinvestment banking and financial services with more than 8,000 employees in 24countries. Macquarie Bank Limited is listed on the Australian Stock Exchange,with a market capitalisation of approximately £6.2bn. Its total assets areapproximately £43.7bn, with a further £57.8bn in assets under management.Members of the Macquarie Bank Group manage equity of around £14bn invested inmore than 90 businesses around the world which provide important services tocommunities in the UK, Germany, Portugal, Italy, France, Sweden, Denmark, theNetherlands, Belgium, Canada, US, Australia, Korea, Japan and South Africa. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
SGC.L