UK-based train operator FirstGroup Plc has come under renewed pressure to break up the Greyhound business and divest the iconic US bus brand from investor Sandell Asset Management, Bloomberg reported.
Calling for a revamp of the operations, the New York-based investment firm said it was premature for FirstGroup to reject its proposal on December 11. Sandell Asset Management gave a revised strategy today.
In a statement, the investment firm's Chief Executive Officer Tom Sandell said, "We believe shareholders strongly support our ideas, and have been encouraged by their reaction since our engagement with the company became public."
Sandell said FirstGroup should sell the Greyhound unit and spin off stock to shareholders in the US business that remained. The proceeds should be used to pay back debt and grow its rail and bus operations in the UK. The investment firm said these steps should be done in conjunction with a turnaround project outlined by FirstGroup, saying that it held an estimated 3.1% stake in the transport operator.
FirstGroup has trains that ply routes in Scotland and northern England and rail routes that connect London with Wales. Based in Aberdeen, Scotland, the company bought Laidlaw, the owner of Greyhound in 2008 which led its debt to triple to £2.2 billion or $3.6 billion. As of September 30 last year, FirstGroup posted a net debt of £1.5 billion which represented a drop of 31% compared to the figures from the year before. In the fiscal six months that ended in September, the company's underlying operating profit jumped 10%, the report said.
According to information from its website, Sandell Asset Management Corp was founded by Tom Sandell in 1998. The company describes itself as a "leading, private, alternative asset manager specializing in international, event driven, multi-strategy investing with a strong focus on global risk arbitrage, equity special situations and credit opportunities."
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