The parent company of First Student rejected a proposal made last month by a minority shareholder to sell its North American school-bus contracting operations as well as Greyhound in order to pay down debt and re-invest in its UK business.
A First Student spokeswoman confirmed for STN that hedge fund Sandell Asset Management made the request of the FirstGroup plc board in early December to reverse falling stock prices and to protect the company’s credit rating. But the proposal was dismissed as containing “a number of flaws and inaccuracies,” according to The Guardian.
Tim O’Toole, FirstGroup’s CEO, responded on Dec. 11 that the company has no plans to sell its businesses that were acquired seven years ago from Laidlaw.
“We have a well-defined vision and remain focused on delivering our local plans, achieving our targets and providing the high-quality service that our customers deserve,” the spokesperson told STN.
Sandell has a 3.1-percent stake in the Aberdeen, Scotland company, which operates bus and train lines throughout the United Kingdom in addition to First Student, First Transit and Greyhound in the U.S. and Canada.
In related news, Deutsche Bank reaffirmed a “hold” rating on FirstGroup stock, which rebounded slightly at the end of the year amid the news. In May, FirstGroup had to raise approximately US$1 billion to avoid a “junk” credit rating, reported Reuters. Then, on Jan. 9, Investec upgraded FirstGroup to “buy” status.