First Group: General Discussion

[6Gman]

Agreed, if anything happens to First Group, it may prove to be NX that comes out as a surprise purchaser.

The expression "poisoned chalice" comes to mind.

 

[winston270twm]

The expression "poisoned chalice" comes to mind.

It's been a long time coming... O'Toole has had more than enough time to turn things around & extremely patient major shareholders..

 

[Kahuna47]

What are NX like as a bus company? Not had any experience of them and don't know anyone who has tbh (due to their very limited operating areas!).
I know that overall Stagecoach and Arriva are very much chequered across the country, whereas Transdev and Go Ahead appear to be well liked and respected by staff and customers alike..

 

[goldisgood]

What are NX like as a bus company? Not had any experience of them and don't know anyone who has tbh (due to their very limited operating areas!).
I know that overall Stagecoach and Arriva are very much chequered across the country, whereas Transdev and Go Ahead appear to be well liked and respected by staff and customers alike..

pfft... Oxford Bus Company and Thames Travel constantly let me down - overpriced fairs (£8 for an adult and child single from Didcot to Wantage, 13 miles), the buses I normally catch in the morning on a JOINT ROUTE with Stagecoach run into the next Stagecoach service regularly meaning I am late 3/4 of the time, and frequent break downs. In 3 years of commuting on the S9, I have experienced one breakdown, whilst friends who catch the 4/4B have breakdowns at least twice a month. A friend who unfortunately has no other company complains constantly about Thames Travel - he is often unable to find a seat on overcrowded buses and is forced to stand for a journey along fast roads, the other service he can catch is regularly cancelled on an hourly service.
This drove me to the point of noting down services which were a no show/more than 5 minutes late. Let's just say I got bored of typing it every day.

 

[Surreyman]

Lots of speculation going on, on what might happen to First Group.
The latest story being that there are accusations of share price manipulation (I have no idea whether there is any truth in this).
The company (Group)is currently profitable, in the sense that it can pay its bills/wages/debt re-payments and is even managing to pump some money into its DB pension scheme, it can (at least in the short term) not worry too much about the pension deficit issue (many other companies have the same problem - Stagecoach for example).
Debt is being paid down and some of it is being 'rescheduled' on more favourable terms.
However, no dividends are being paid, the share price slumping (not withstanding the recent Apollo 'blip') and there are serious issues around investing in the business.
Before anyone accuses me of being a First defender, I should say that I am definitely in the 'Anti-Fan' club, at least as far as Uk Bus is concerned.
Apollo (or another Company) may come back with a better offer and the board may or may not accept it.
I don't know too much about the North American operations but in the UK it seems to be looking grimmer by the week; -
Rail franchises at TPE and South Western likely to fail to meet growth targets/future payments to Government. The DFT will have no choice but to bale them out or at least 're-structure' the franchises as per Stagecoach/Virgin East Coast).
Uk Bus, at best a mixed bag, operating profits down in nearly all subsidiaries. (Yes I accept that all Bus operators are experiencing the same pressures).
Uk Bus Management has cut costs/re-structured/sold/closed down the various parts of the Uk operation with some success (I believe they recently claimed that all parts of the UK bus were now profitable).
Investment has now been severely cut back, a sensible thing short term, unsustainable in the medium term.
At some stage, drastic action has to be taken, whether under existing ownership or new.
It would seem that the sale of some parts of the group is inevitable, in order to ensure the survival of the rest, my money is on Greyhound (in the USA/Canada) and sizeable parts of UK bus.
The CMA will restrict who can buy what in the UK and some of the subsidiaries are not exactly attractive buys.
Of course First retains the pension obligations of staff TUPED across but the proceeds from sales can be used to reduce the pension deficit.

 

[Non Multi]

New Route in Slough
Quite contrary to their local record of late, First Slough are going to start a half-hourly 'route 9' (Heathrow T5 - Slough - Windsor), clearly created to compete against Reading Transport's soon to launch hourly 'Greenline 703' (T5 - Slough - Windsor - Legoland - Bracknell).

I've been fairly clear in my criticism of First Southampton's management of their Slough network... Locking the stable door and all that...

I'd expect this route with its planned timetable (link) will lose First money hand over fist.

 

[overthewater]

What on earth has been going out with the first group share price manipulation? Also were now hiding for Dart broad speculation one false move and it could all change...

 

[TheGrandWazoo]

What on earth has been going out with the first group share price manipulation? Also were now hiding for Dart broad speculation one false move and it could all change...

Share price manipulation

Perhaps some people have been looking at an underpriced (underperforming) business restructuring their debt and then buying in? The Apollo make their interest known and then others go in thinking that there could be another bid from Apollo, or it acts as a stalking horse and so people think that another bid may come from another quarter.

Not manipulation - it is how share prices move!

 

[overthewater]

That what I was thinking? I thought there might be another bid somewhere, but its not in Apollo or other interesting to push the share price higher. I think it would be someone within first that would gain?

 

[Surreyman]

Share price manipulation

Perhaps some people have been looking at an underpriced (underperforming) business restructuring their debt and then buying in? The Apollo make their interest known and then others go in thinking that there could be another bid from Apollo, or it acts as a stalking horse and so people think that another bid may come from another quarter.

Not manipulation - it is how share prices move!

TGW - you may well be right but my source: -

Reported in FT

"The UK financial markets watchdog is scrutinising irregular movements in the share price of FirstGroup, the FTSE 250 British bus and rail operator, before its takeover bid from Apollo Management was revealed this week. The Financial Conduct Authority is in the early stages of examining why shares in FirstGroup, which has rejected the all-cash offer from the US private equity group, soared in the weeks leading up to Wednesday’s announcement. Shares in FirstGroup — which owns Greyhound, the long-haul US coach service — rose 32 per cent from 77p to 101.80p in the two weeks preceding the bid announcement. This was a large enough rise to catch the attention of the FCA, the main defender in the UK against market abuse and insider trading. Before the recent surge, the transport group’s shares fell nearly 40 per cent in the year to March 31 amid profit warnings, and it has failed to pay a dividend since a rights issue in 2013."

 

[TheGrandWazoo]

That what I was thinking? I thought there might be another bid somewhere, but its not in Apollo or other interesting to push the share price higher. I think it would be someone within first that would gain?

So you are alleging that someone in First Group is manipulating the share price for their own gain? Really?

No, the price was rising anyway. They had to disclose the Apollo approach. That pushes the price up further as I explained!

EDIT: the authorities will be concerned if there has been any form of insider trading e.g. if someone has discovered if was a likely bid from Apollo (or some other party)

 

[overthewater]

No? I think we're getting badly cross paths... I was agreeing with you, I was asking in a bad way IE is it first managers that got the finger of suspicion?

Again if the share crash and people start buying them that also pushes the price up?? I think this manipulation is utter hogwash.

 

[winston270twm]

Share price manipulation

Perhaps some people have been looking at an underpriced (underperforming) business restructuring their debt and then buying in? The Apollo make their interest known and then others go in thinking that there could be another bid from Apollo, or it acts as a stalking horse and so people think that another bid may come from another quarter.

Not manipulation - it is how share prices move!

But there was no need for First Group to make an announcement of any kind in the first place, they hadn't even received a formal offer, only a 'highly preliminary' proposal.

 

[TheGrandWazoo]

But there was no need for First Group to make an announcement of any kind in the first place, they hadn't even received a formal offer, only a 'highly preliminary' proposal.

Guidance issued by the UKLA (now part of the FCA):

“Listing Rules. The key Listing Rules affecting business updates are in the box "Key UK Listing Rule obligations". In summary, issuers must notify without delay major new developments that may affect their business if the development may lead to a substantial share price movement. Issuers must also notify without delay information concerning a change in financial condition, performance or expectation of performance if the change would be likely to lead to a substantial share price movement.”

Despite not being a formal offer, the approach is doubtless “a major new development“

 

[winston270twm]

Guidance issued by the UKLA (now part of the FCA):

“Listing Rules. The key Listing Rules affecting business updates are in the box "Key UK Listing Rule obligations". In summary, issuers must notify without delay major new developments that may affect their business if the development may lead to a substantial share price movement. Issuers must also notify without delay information concerning a change in financial condition, performance or expectation of performance if the change would be likely to lead to a substantial share price movement.”

Despite not being a formal offer, the approach is doubtless “a major new development“

Not sure I agree, they have already said it was a 'preliminary and highly conditional indicative proposal', however, it also states above 'Issuers must also notify without delay' First haven't done this, they've sat on the proposal long enough to consider it & decide to decline it before releasing the news to the London Stock Exchange. This is what I believe is causing the FCA interest as it allows time for news to leak out.

 

[TheGrandWazoo]

Not sure I agree, they have already said it was a 'preliminary and highly conditional indicative proposal', however, it also states above 'Issuers must also notify without delay' First haven't done this, they've sat on the proposal long enough to consider it & decide to decline it before releasing the news to the London Stock Exchange. This is what I believe is causing the FCA interest as it allows time for news to leak out.

I confess I'm no legal beagle but I think the relevant part of the City Code on Takeovers and Mergers is referenced by First in their statement:

"An Opening Position Disclosure is an announcement containing details of interests or short positions in, or rights to subscribe for, any relevant securities of a party to the offer if the person concerned has such a position. An Opening Position Disclosure is required to be made after the commencement of the offer period and, if later, after the announcement that first identifies an offeror and must be made by the offeree company, by an offeror (after its identity is first publicly disclosed) and by any person that is interested in 1% or more of any class of relevant securities of any party to the offer. Opening Position Disclosures must be made within 10 business days."

That, I think, means that they have to advise within 10 working days so that other shareholders are aware of the potential approach.

As I say, I'm no expert otherwise I'd have a much bigger house!!!

 

[winston270twm]

I confess I'm no legal beagle but I think the relevant part of the City Code on Takeovers and Mergers is referenced by First in their statement:

"An Opening Position Disclosure is an announcement containing details of interests or short positions in, or rights to subscribe for, any relevant securities of a party to the offer if the person concerned has such a position. An Opening Position Disclosure is required to be made after the commencement of the offer period and, if later, after the announcement that first identifies an offeror and must be made by the offeree company, by an offeror (after its identity is first publicly disclosed) and by any person that is interested in 1% or more of any class of relevant securities of any party to the offer. Opening Position Disclosures must be made within 10 business days."

That, I think, means that they have to advise within 10 working days so that other shareholders are aware of the potential approach.

As I say, I'm no expert otherwise I'd have a much bigger house!!!

TGW - That's not correct:

These are the Opening Position Disclosure's:
http://www.londonstockexchange.com/exchange/news/market-news/market-news-detail/other/13602368.html
http://www.londonstockexchange.com/exchange/news/market-news/market-news-detail/other/13602416.html
http://www.londonstockexchange.com/exchange/news/market-news/market-news-detail/other/13602629.html

Basically, any transactions long or short, of any size, made by any party holding 1% or more in FGP must be declared within 10 working days - you'll see these updates daily until at least May 9th (put up/shut up deadline)

i.e. any one stake building or offloaded has to declare their positions.

 

[overthewater]

This has become even more interesting by the day with this. We're 3 weeks away and it's all to play for.

 

[TheGrandWazoo]

TGW - That's not correct:

These are the Opening Position Disclosure's:
http://www.londonstockexchange.com/exchange/news/market-news/market-news-detail/other/13602368.html
http://www.londonstockexchange.com/exchange/news/market-news/market-news-detail/other/13602416.html
http://www.londonstockexchange.com/exchange/news/market-news/market-news-detail/other/13602629.html

Basically, any transactions long or short, of any size, made by any party holding 1% or more in FGP must be declared within 10 working days - you'll see these updates daily until at least May 9th (put up/shut up deadline)

i.e. any one stake building or offloaded has to declare their positions.

No worries - I was concerned I wasn't reading it correctly

 

[WatcherZero]

First Greater Manchester were officially censured in March meeting.

https://www.greatermanchester-ca.go..._from_the_previous_meeting_dated_9_march_2018

 

[radamfi]

First Greater Manchester were officially censured in March meeting.

https://www.greatermanchester-ca.go..._from_the_previous_meeting_dated_9_march_2018

"The service was poor in comparison with other cities, especially those abroad and
compared to other operators in the conurbation"

We are always told that international comparisons are irrelevant because of the particular British circumstances.

 

[TheGrandWazoo]

"The service was poor in comparison with other cities, especially those abroad and
compared to other operators in the conurbation"

We are always told that international comparisons are irrelevant because of the particular British circumstances.

The statement is correct though it does fail to address the causal factors. Well done for spotting their stupidity; you should write and tell them

 

[Volvodart]

http://www.cityam.com/284237/south-western-owner-first-group-under-pressure-activist

South Western owner First Group under pressure from activist West Face in wake of rejected Apollo bid

First Group, the transport company which owns South Western Railway and Greyhound buses, is under pressure from activist investor West Face Capital to shake up its business.

The Canadian asset manager is understood to be leaning heavily on First Group's board to make operational changes, after the company received an unsolicited offer from private equity giant Apollo last week.

London-listed First Group, which currently has a market value of around £1.35bn, rejected the bid without disclosing the price saying it "fundamentally undervalues the company".

Yet West Face is understood to have been pushing for change at the rail and bus operator for some time in order to avoid such a bid, which First Group termed "opportunistic".

The investor, which has followed First Group for more than five years and been an active shareholder for over one year, believes that analysts do not "understand" First Group which has led to an undervaluation.

West Face has also told management they are "unambitious", own very little of the business themselves and have been reluctant to enforce change, City A.M. understands.

More specifically, it is understood that West Face advised against the appointment of Richard Adams to the board in 2017 – the same Richard Adams who was formerly finance director at Carillion and is the subject of regulatory probes.

 

[winston270twm]

https://www.thetimes.co.uk/article/first-group-under-pressure-to-split-w00wr95lk

'The board of First Group is facing pressure from an activist shareholder to shake itself up amid speculation that the business could be broken up.

It is understood West Face Capital, a Canadian asset management firm, has told directors of the train and bus operator about concerns that they are unambitious, have not improved margins as promised and over the company’s corporate governance'

I think the pressure is mounting on o'Toole, if he doesn't look at either splitting the group or selling off a large part of the group to pay down debt, I think West Face Capital will push for a change of leadership!

 

[DragonEast]

Is any of this a surprise? I know, I'm classified as one of the moaners (for the sake of it, presumably).

But it seems to me:
1. The easy fate for First Bus, as with most of the traditional "utilities" is as a property asset (with the buses ancillary). Would be a pity, they could be so much better, but not much chance of that, is there? (On the other hand as a off-shore island, property keeps the country afloat so they're far from alone). The past isn't necessarily a guide to the future but it's often the best we've got.
2. First have made a faustian pact: HQ can stave the OpCos of investment and, in exchange, they can do pretty well what they like, so no-one is under any pressure nor has to change. Yes, they do alter services, but looks to me like it's always the easy option, and usually for their own convenience rather than to make a better business or for the benefit of the passengers. Perhaps even the management often look like they are the passengers, just along for the ride (or maybe they are like ducks, paddling furiously beneath the water, but it ain't getting them anywhere). If I'm ever inclined the read any First PR, I'm feel like I'm reading the sequel to Alice in Wonderland. I can't make any sense of it at all in the real world.

Yes all operators suffer the same issues and problems. But that's not the point, it's how you deal with them. Most of the others seem to concentrate on core routes and make the most of them. You need a bit of confidence to do that. Do First have a core business? If they have a business strategy it looks like fear, mostly of competition.

 

[overthewater]

I'm just surprised its taken this long for it to all boil over, This thread started on 23 May 2012, six years and the new team come in before that, so that seven years at least. Most of the time the pre warnings have come true: sell offs, rails and even takeovers and it seem to have reach with a shareholder revolt.

Its very hard to tell where this could end up, It just like Disney in the 1980s.... Its possible Shareholder might believe the assets are better in lots than together,

HQ can stave the OpCos of investment and, in exchange, they can do pretty well what they like, so no-one is under any pressure nor has to change. Yes, they do alter services, but looks to me like it's always the easy option, and usually for their own convenience rather than to make a better business or for the benefit of the passengers

That is not true, and over the past few years it hasn't stave the all operations of investment, yes certain places has seen front line buses lives being extended in Life and other dodgy deeds but there have overhaul it back office operations stream lined the depots in how there work etc. New ticket machines have appeared along with M tickets. Simple fact is there need to be buying 300 brand new buses a year just to keep pace with the 17/18 year life span...

We could all see it coming, I bet were all disappointed its come to this, warning signs were in 2015...

 

[Dentonian]

"The service was poor in comparison with other cities, especially those abroad and
compared to other operators in the conurbation"

We are always told that international comparisons are irrelevant because of the particular British circumstances.

They are! Unfortunately, politicians, like Planners, are seduced by the Holy Grail of Integration, as they don't actually travel by bus (or indeed local rail) very often, so don't see EVERY time they leave the house the reasons why it will never work.

 

[radamfi]

Unfortunately, politicians, like Planners, are seduced by the Holy Grail of Integration

How do you come to that conclusion given that British transport is the least integrated in Europe?

 

[Dentonian]

How do you come to that conclusion given that British transport is the least integrated in Europe?

Because they want it to be more integrated, but its a pipedream. Like I said, you see why it won't work every time you travel. Eg. I alluded to trip to Bolton on another thread. To get there I crossed M'cr city centre, by MetroShuttle. However, unreported roadworks opposite Spinningfields had gridlocked Deansgate (this was 1100hrs), and the stop on Bridge Street I used last time I made this journey has been removed so it was nearly 50 minutes from getting off my train in Piccadilly to getting a number 8 one stop before Salford Station. I then observed the main town centre bus stops in both Walkden and Farnworth closed - but not officially. Amazingly, my return journey was trouble free, despite the "fact" I read later, I should have been caught up in total chaos due to a Chemical leak on Princess Street. Obviously, fake news!!!!
Then yesterday, my train home was 13 minutes late - because the train blocking it in was 15 minutes late, but having walked 300 metres along the Platform, I had lost the option of turning back and going for a bus instead. And guess what, a colleague said EXACTLY the same thing happened the previous evening. And just to show how despite the billions of tax pounds pumped into Rail, the industry lacks the basics; the newly repainted Sprinter train we finally crowded on board, didn't even have desty blinds! Not surprisingly, in the circumstances, a woman stood opposite having told of her woes getting into Manchester earlier, casually asked "Does this train stop at Levenshulme". We had to tell her the bad news that it was going to Marple and she wanted the Hazel Grove train which had been boxing us in for the previous 15 minutes. And before you ask, No: there was no conductor telling passengers where the train was going and No, refurbished it might have been, but the train didn't have interior monitors detailing the route/stops.

 

[radamfi]

Because they want it to be more integrated

Current transport policy and transport policy over many decades says otherwise. Even before 1986 there was poor integration. London has poor integration compared to other countries.