REG-FirstGroup PLC: Statement re Coast Capital statement

FirstgroupAnnouncement

18/05/2021 11:15

FIRSTGROUP PLC
Re: COAST CAPITAL STATEMENT

FirstGroup plc (‘FirstGroup’ or the ‘Group’) notes the statement by
Coast Capital LLC in relation to the agreed sale of First Student and First
Transit to EQT Infrastructure announced on 23 April 2021 (the 'Sale'). The
Coast Capital statement contains numerous inaccuracies and speculations which
the Board would like to correct.

The Sale followed a comprehensive and competitive process in order to seek the
best possible price for First Student and First Transit, which was
well-publicised for more than a year (having been announced in March 2020).
Through the sale process, the businesses were widely marketed and the Group
and its advisers actively engaged with more than 40 potential buyers. The
exclusivity arrangements included in the sale agreement signed with EQT are in
line with standard US practice, particularly following an extended and broad
sale process. The Board is aware of its fiduciary responsibilities to
shareholders and continues to comply with them at all times.

This process overseen by the Board led to the agreed Sale for a full strategic
value, which looks beyond the pandemic and reflects the high quality and
long-term nature of these assets. The Group notes that the Sale is described
by Coast Capital as "at a significant negative premium to book value", however
the net proceeds on sale are above book value as at 30 September 2020.  

In the context of a competitive process to extract the most attractive
proposal, an earnout structure was agreed for First Transit which would
benefit continuing shareholders in the Group. This reflects First Transit’s
strong prospects for future performance, not least in light of the Biden
Administration's commitments to investment in infrastructure and public
transportation. Under the earnout FirstGroup will receive up to a further
£170m, payable on the third anniversary of the Sale (following an independent
valuation), or sooner if sold to a third party. 

The Group has a number of longstanding liabilities. As previously set out, in
determining the use of proceeds the Board has sought to balance returning
value to shareholders while also making a necessary and substantial
contribution to the UK pension deficit, reducing its debt (including repayment
of Covid Corporate Financing Facility to the UK government) and addressing
other longstanding liabilities. In parallel, the Board carefully considered
the appropriate capital structure and distribution policy for the ongoing
Group, and it concluded that a well-capitalised, de-risked balance sheet will
provide the retained group with flexibility to navigate end market uncertainty
at this point in the pandemic recovery, pursue its strategy going forward and
support a progressive annual dividend from 2023.

At the same time, the Board has committed to keep the balance sheet position
of the retained group under review and will consider the potential for making
further additional distributions to continuing shareholders, in addition to
the proposed return of value to shareholders described in the Sale
announcement and circular.

As previously stated, the Group is consulting with major shareholders as to
the most appropriate distribution mechanism for the return of value to
FirstGroup shareholders. Full details of the proposed return of value
described in the circular will be made available shortly following completion
of the Sale. The Group would also note that the shareholder approval process
for the transaction with EQT, including the timetable, is entirely in line
with company law and market practice for a UK listed company.

The Group, including the Chairman, has consistently engaged with Coast Capital
over several years, carefully considered their proposals and followed up with
introductions they proposed. The Group has also sought to correct a number of
inaccurate assertions, many of which appear in Coast Capital's statement of 17
May 2021. Several such points were directly addressed within the circular
approved by the Financial Conduct Authority that was sent to all FirstGroup
shareholders on 10 May 2021.

The Board has received financial advice from Rothschild & Co, J.P. Morgan
Cazenove and Goldman Sachs in relation to the Sale. The Board unanimously
recommends the transaction as being in the best interests of all shareholders
and recommends shareholders vote in favour of the Sale at the General Meeting
on 27 May.

Contacts at FirstGroup:
Faisal Tabbah, Head of Investor Relations
Stuart Butchers, Group Head of Communications
corporate.comms@firstgroup.com
+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: 3.1. FirstGroup plc (LSE: FGP.L) is a leading provider of
transport services in the UK and North America. With £7.8bn in revenue in the
year to 31 March 2020 and around 100,000 employees, we transported 2.1bn
passengers. Whether for business, education, health, social or recreation –
we get our customers where they want to be, when they want to be there. We
create solutions that reduce complexity, making travel smoother and life
easier. We provide easy and convenient mobility, improving quality of life by
connecting people and communities. Visit our website at www.firstgroupplc.com
and follow us @firstgroupplc on Twitter.



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