REG-FirstGroup PLC: Sale completion and increase in proposed return of value

FirstgroupAnnouncement

22/07/2021 07:05

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION
Thursday 22 July 2021
 

FirstGroup plc
Sale completion and increase in proposed return of value
* Sale of First Student and First Transit to EQT Infrastructure completed
yesterday evening
* Proposed return of value in autumn increased to £500m (c.41p per share)
from £365m
* Estimated pro forma net debt of c.£100m following the Sale and the use of
proceeds is unchanged, as the increase in proposed return of value reflects: *
$58m increase in cash proceeds received at completion due to final working
capital and debt and debt-like balances
* Increased clarity for First Rail resulting from agreement of SWR and TPE
National Rail Contracts and final rail franchise termination sums
* Cashflows of the continuing Group anticipated to be better than was assumed
in April
FirstGroup plc ('FirstGroup' or the 'Group') is pleased to announce that it
has completed the sale of First Student and First Transit to EQT
Infrastructure (the 'Sale'), which was approved by FirstGroup shareholders on
27 May 2021. Completion follows the satisfaction of the conditions precedent
to the Sale, as outlined in the circular to FirstGroup shareholders published
on 10 May 2021.

The net disposal proceeds of $3,123m received by FirstGroup at completion is
an increase of $58m over the base amount previously announced, due to the
final adjustments for working capital and debt and debt-like items as
described in the circular.

The Board intends to increase the proposed return of value to shareholders to
£500m (equivalent to c.41p per share) from £365m. The increased quantum
reflects the higher cash proceeds received from the Sale, the increased
clarity for First Rail resulting from agreement in May 2021 of SWR and TPE
National Rail Contracts and the TPE final rail franchise termination sum being
c.£50m lower than anticipated, and improving cash flow expectations for the
continuing Group as a result of further easing of pandemic restrictions in our
core UK bus and rail markets. The estimated pro forma net debt of c.£100m for
the ongoing Group following the Sale, and the other uses of net disposal
proceeds set out in the circular, are therefore unchanged. The proposed return
of value is expected to be undertaken in the autumn of 2021, with the
distribution mechanism to be announced in due course in consultation with
shareholders.

In addition to the cash consideration received at completion of the Sale, the
First Transit earnout worth up to $240m was also agreed as part of the Sale
consideration, under which the Group will receive 62.5% of First Transit's
value above $380m, either in three years (following an independent valuation)
or sooner in the event that it is sold by EQT Infrastructure to a third party.

The Board is committed to keeping the balance sheet position of the ongoing
Group under review and will consider the prospects for making further
additional distributions to shareholders in due course, following
crystallisation of the First Transit earnout noted above, resolution of the
legacy liabilities related to Greyhound and the potential release of monies
from pension escrow (up to £117m). The Board also notes the capacity to
increase gearing over time, as end market conditions and hence business
performance improves.

First Student and First Transit will be reported as discontinued operations in
the Group's annual results to the end of March 2021, which will be announced
on 27 July.

Commenting, FirstGroup Chairman David Martin said:
"We are pleased to announce the completion of the sale of First Student and
First Transit and a significant increase in the proposed return of value to
shareholders this autumn. This delivers on our strategic objective and creates
a focused and stronger business with a bright future. The vital role of public
transport in the UK has never been clearer, and with the most supportive
policy backdrop in decades coupled with our strong credentials, FirstGroup is
in prime position to deliver on its goals with a well-capitalised balance
sheet and an operating model that will support attractive dividends."

Commenting, FirstGroup Chief Executive Matthew Gregory said:
"We have delivered this transformational sale which resolves the Group's
long-standing legacy liabilities, puts the Group in a strong position to
benefit from its many opportunities, and releases £500m of value to return to
shareholders. I would like to thank everyone in First Student and First
Transit for the pivotal role they play in their communities. As part of the
FirstGroup family for many years, they have gone from strength to strength,
and I am confident that they will continue to flourish as part of EQT
Infrastructure."

 Contacts at FirstGroup: Faisal Tabbah, Head of Investor Relations Stuart Butchers, Group Head of Communications corporate.comms@firstgroup.com Tel: +44 (0) 20 7725 3354  Contacts at Brunswick PR: Andrew Porter / Simone Selzer Tel: +44 (0) 20 7404 5959  

Notes
Legal Entity Identifier (LEI): 549300DEJZCPWA4HKM93. Classification as per DTR
6 Annex 1R: 2.2. This announcement contains inside information. The person
responsible for arranging the release of this announcement on behalf of
FirstGroup is David Isenegger, Group General Counsel and Company Secretary.



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