FirstGroup’s biggest shareholder has demanded the resignation of the transport firm’s chief executive and two board members, after failing to prevent the sell-off of its American businesses.
Coast Capital, the New York-based hedge fund which owns about 15% of the group, had opposed the $3.1bn sale of the FirstStudent and FirstTransit businesses to Swedish group EQT, arguing the price was too low for the school and city bus services.
The sale completed last Thursday almost three months after it was first announced, and after being approved by just over 60% of shareholders at a meeting in May. FirstGroup said it would increase returns to shareholders by 37% to £500m on the back of the sale.
However Coast, which has long opposed turnaround plans set out by FirstGroup, and in the past urged it to ditch its UK rail division to focus on US growth, described the sale in May as a “terrible deal” and criticised the management for trying to hive off the US public transport company in the middle of a pandemic when its perceived value was low.
Coast Capital’s founding partner James Rasteh said that FirstGroup had not engaged with their alternative proposals for maximising value from the assets.
Coast has now – not for the first time – demanded that FirstGroup’s chief executive, Matthew Gregory, steps down along with two non-executive directors, Swissport boss Warwick Brady and Julia Steyn, whose expertise is US transit. A statement issued on Monday said: “Given the board’s decision to pursue a different path, Coast Capital and fellow shareholders request that Gregory resign.”
A FirstGroup spokesperson said: “The successful sale of First Student and First Transit achieved a full strategic value that looks beyond the pandemic. The transaction, now approved by a majority of shareholders, enables the group to return £500m of value to all shareholders, address its longstanding liabilities and make a substantial contribution to the pension scheme deficits.
“We consistently engage on a variety of topics with all our major shareholders. We have carefully considered Coast Capital’s various outline and initial ideas for the business over time.”
