REG-FirstGroup PLC: Statement re East Midlands and West Coast competitions <Origin Href="QuoteRef">FGP.L</Origin>

FirstgroupAnnouncement

24/01/2017 12:05

Statement re: East Midlands and West Coast Partnership rail franchise
competitions

FirstGroup plc (‘FirstGroup’) and Trenitalia UK Limited (‘Trenitalia
UK’) are pleased to announce that they will bid together for the East
Midlands and West Coast Partnership rail franchise competitions due to be
awarded in 2018. Trenitalia is the passenger rail transportation company part
of FS Italiane Group.

First Trenitalia East Midlands Rail Limited, the joint venture between
FirstGroup and Trenitalia UK, has today submitted an expression of interest to
the Department for Transport in respect of the East Midlands rail franchise
competition.

Commenting, Steve Montgomery, First Rail Managing Director said:

"We are pleased to announce that we will be partnering with Trenitalia to bid
for the upcoming East Midlands and West Coast Partnership rail franchises. We
have a strong track record in delivering continued modernisation and
investment, alongside industry partners, through our rail operating companies
Great Western Railway, TransPennine Express and Rail Operator of the Year,
Hull Trains.

“Both ourselves and Trenitalia have extensive expertise of running commuter,
regional and long distance services such as those that make up the East
Midlands franchise. Their knowledge will add further depth and understanding
as we develop our proposals to deliver passenger benefits that take full
advantage of the significant investment that government and the industry are
making in the region’s rail infrastructure. Our proposals will keep people
moving and communities prospering.

“Similarly, Trenitalia have transformed the customer experience on Italy’s
railways through their high speed Frecciarossa routes. They will be a world
class bidding partner as we develop proposals to deliver excellent services
for West Coast passengers and work closely with HS2 Ltd to deliver the best
solutions for the new HS2 service whilst reducing crowding on the existing
network and generate economic growth up and down the country.”

Commenting, Barbara Morgante, CEO of Trenitalia, said:

“We are delighted to announce our partnership with FirstGroup, with whom we
will participate in the recently announced East Midlands and West Coast
Partnership bids. We believe that the experience, competence, innovation and
skills of our two companies, developed in international markets, represents a
perfect mix to vie for these challenging bids. Trenitalia is ready to bring
all its competencies to the partnership, both from a technical and commercial
side, developed in the highly competitive Italian market. Our proposal will be
driven by our highly customer focused vision. Our recent
agreement-in-principle for the acquisition of c2c also serves to transform us
from a potential new comer into a convincing, and effective, player in the UK
market, and will strengthen the Trenitalia-FirstGroup partnership.

“This partnership is a second milestone in our plan to expand in the UK rail
passenger market, in line with the internationalisation plans of the entire FS
Italiane Group.”

Notes

1.   The next East Midlands franchise will start in July 2018 and will
encompass major infrastructure enhancements and improvements in the franchise
area.

2.   The West Coast Partnership franchise was announced on 4 November 2016,
combining the current InterCity West Coast services with the development and
introduction of High Speed 2 services. The new franchise will be responsible
for services on both the West Coast Main Line from 2019 and designing and
running the initial high speed services from 2026. The franchise will run for
the first three to five years of operation of HS2.

3.   First Rail Holdings Limited (‘FRH’) and Trenitalia UK have entered
into a joint venture agreement governing First Trenitalia East Midlands Rail
Limited, which amongst other terms provides that, in the event of a default by
either shareholder, the other shareholder will have the right to acquire the
defaulting shareholder's shares for fair value, such amount not being subject
to any cap. As a consequence and by application of Chapter 10 of the Listing
Rules (in particular paragraph 5R (3A) of Annex 1 to Chapter 10), the Group is
required to comply with Listing Rule 10.4.1. In compliance with that
obligation, the Group provides the following information: under the joint
venture terms FRH holds 70% of the equity in First Trenitalia East Midlands
Rail Limited and Trenitalia UK holds the remaining 30%, with Trenitalia UK
acquiring its shares from FRH for an aggregate consideration of £30, which
has been satisfied from Trenitalia UK's existing financial resources. First
Trenitalia East Midlands Rail Limited has no trading history and has gross
assets of £100.

4.   FRH and Trenitalia UK have also entered into a joint venture agreement
governing First Trenitalia West Coast Rail Limited to participate in the West
Coast Partnership franchise competition, which amongst other terms provides
that, in the event of a default by either shareholder, the other shareholder
will have the right to acquire the defaulting shareholder's shares for fair
value, such amount not being subject to any cap. As a consequence and by
application of Chapter 10 of the Listing Rules (in particular paragraph 5R
(3A) of Annex 1 to Chapter 10), the Group is required to comply with Listing
Rule 10.4.1. In compliance with that obligation, the Group provides the
following information: under the joint venture terms FRH holds 70% of the
equity in First Trenitalia West Coast Rail Limited and Trenitalia UK holds the
remaining 30%, with Trenitalia UK acquiring its shares from FRH for an
aggregate consideration of £30, which has been satisfied from Trenitalia UK's
existing financial resources. First Trenitalia West Coast Rail Limited has no
trading history and has gross assets of £100.

5.   Both FirstGroup and Trenitalia hold 'Pre-Qualification Questionnaire
Passports' with DfT Rail Executive which shows that they have satisfied basic
financial and other competence criteria and allows them to submit franchise
bids to Government. In December 2015, Trenitalia became the first new entrant
to be awarded a PQQ Passport by the Department for Transport and since then is
pursuing a number of franchise opportunities.

6.   In January 2017 Trenitalia reached an in principle agreement to acquire
the c2c franchise.

Trenitalia is the passenger rail transportation company part of FS Italiane
Group, a major industrial player with an increasing international presence,
and growing profit (the net income rose +53.1% in 2015 over 2014). FS Group
runs 8,000 trains a day, serving 600 million passengers and carrying 50
million tons of freight a year, over a network exceeding 16,700 kilometers.
The group’s objective is to develop a large-scale mobility and logistics
project capable of contributing to the country’s economic growth. The
holding company, FS Italiane, controls companies active in specific core
businesses – all of which, in terms of safety levels and technological
standards, are European leaders. Trenitalia, the group’s rail transportation
company, is one of Europe’s top railway operators, and manages passenger
transport with its long haul connections, both on high speed (Frecciarossa)
and conventional lines, as well as regional and metropolitan services. On
January 11th 2017 Trenitalia has reached a principle agreement with National
Express to acquire the c2c franchise. Other companies belonging to the FS
Italiane Group include RFI, Busitalia, Italferr, Mercitalia, Ferservizi,
Italcertifer, Centostazioni, GS Rail, FS Sistemi Urbani, Netinera Deutschland,
TX Logistik and Thello.

FirstGroup plc (LSE: FGP.L) is the leading transport operator in the UK and
North America. With £5.2 billion in revenues and 110,000 employees, we
transported around 2.2 billion passengers last year. Each of our five
divisions is a leader in its field: In North America, First Student is the
largest provider of student transportation with a fleet of around 47,000
yellow school buses, First Transit is one of the largest providers of
outsourced transit management and contracting services, while Greyhound is the
only nationwide operator of scheduled intercity coach services. In the UK,
FirstGroup is one of Britain's largest bus operators running a fleet of some
6,200 buses, and we are one of the country's most experienced passenger rail
operators, carrying around 140 million passengers last year.

Our vision is to provide solutions for an increasingly congested world...
keeping people moving and communities prospering.



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