July 26 (Reuters) - Coast Capital on Monday demanded the
resignation of FirstGroup's chief executive and two
board members in the wake of a contentious asset sale, deepening
a rift between the British transport company and its biggest
New York-based Coast, which owns roughly 15% in FirstGroup,
has been opposing the sale of the company's U.S.-based
FirstStudent and FirstTransit businesses to Swedish group EQT,
arguing the price was too low.
The deal closed last week after 61% of investors at a
meeting in May voted for the $4.5 billion sale. FirstGroup then
boosted shareholder returns by 37% to 500 million pounds ($687
million), using a portion of the proceeds from the sale.
Coast Capital presented alternate deal proposals to
FirstGroup that Coast believed would provide superior value to
shareholders, founding partner James Rasteh told Reuters, but
added the company did not engage with Coast.
The proposals included a possible sale-and-leaseback
transaction and deals involving a special acquisition vehicle,
"Given the board's decision to pursue a different path,
Coast Capital and fellow shareholders request that (FirstGroup
CEO Matthew) Gregory resign," Coast said in a statement. It also
asked for the resignation of board members Julia Steyn and
A FirstGroup representative declined to comment on Coast's
demand for the resignations, but said: "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."
The company's sale of FirstStudent and FirstTransit
"achieved a full strategic value that looks beyond the
pandemic," the representative said, adding that the deal also
allows the group to address long-standing liabilities and make
contributions to its pension scheme deficits.
Coast Capital had also pushed for Gregory's ouster in 2019
but failed to win the support of a majority of shareholders.
Still, a Coast Capital board nominee, David Martin, was
eventually named chairman.
FirstGroup is sharpening its focus on its buses and trains
businesses in Britain, and is trying to find a buyer for its
Greyhound bus service in the United States.
Shares in the FTSE-250 group fell as much as 2.6% in morning
trade on the London Stock Exchange, but were last down 1% by
Schroders, FirstGroup's second-largest shareholder, that
also opposed the original EQT deal along with Coast, did not
immediately respond to a request for comment on Monday.
($1 = 0.7276 pounds)
(Reporting by Yadarisa Shabong in Bengaluru
Editing by Tomasz Janowski)