Outcome of Judicial Review Hearing
09/03/2022 15:12
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RNS Number : 2323E Rotala PLC 09 March 2022
RNS
9 March 2022
Rotala Plc
("Rotala", the "Company" or the "Group")
Outcome of Judicial Review Hearing re Greater Manchester
On 26 March 2021, the Company announced that on 25 March 2021 the Mayor of
Greater Manchester had made the formal decision to franchise the bus market in
the Greater Manchester region. The Company made an immediate claim to the High
Court of Manchester to judicially review the process by which the consultation
was continued by Greater Manchester Combined Authority ('GMCA') in light of
the COVID-19 pandemic, and the decision of the Mayor to franchise the bus
network.
The outcome of this claim has been handed down by Mr Justice Julian Knowles
today. Throughout the Company's court claim, the Board has remained confident
that both these decisions were irrational and/or unlawful. Therefore, although
of course fully respecting the court's decision, nevertheless it is extremely
disappointing to announce that Mr Justice Julian Knowles has dismissed the
claim. The Board still believes these decisions to be irrational and/or
unlawful and is in the process of applying for permission to appeal the
decision to the Court of Appeal.
As an operator in Greater Manchester, the Company has acted to attempt to
protect its business from a decision that is not only detrimental to Rotala's
future prospects, but also potentially detrimental to the citizens of Greater
Manchester in imposing upon them the financial burden of a franchising scheme
that the Board believes has not been properly assessed in line with the
relevant legislation.
The Company remains committed to providing a high level of service to bus
users in Greater Manchester and remains willing to enter into a statutory
partnership with Transport for Greater Manchester and the other bus operators
in Greater Manchester. The Board is still of the view that the partnership
approach would not only be just as effective as a franchising scheme, and be
done at less risk to the public purse, but also could be implemented far more
quickly than the full franchising scheme.
However, should the Company be unsuccessful in its legal case and the
franchising scheme is implemented, it will potentially be required to sell its
Bolton depot and the bus assets based there to GMCA. The Board believes that
the Bolton depot has first class facilities and is the most modern and
up-to-date bus depot operating in Greater Manchester. The bus fleet based
there is also the most modern of any of the large operators in that region.
The Board is therefore confident that the values which might potentially be
realised from the sale of these assets under the mechanisms which the GMCA has
already announced will at a minimum realise their book values and be more than
sufficient to pay off the mortgage on the Bolton depot and the hire purchase
debt associated with the bus assets based there. As a result, any sale of this
nature would have no negative effect on the Group's balance sheet and its
leverage would fall to very low levels. In this scenario, the capital which
the Group currently has invested in its Bolton operation would be realised
into cash and be available for re-investment or redeployment elsewhere in the
Group.
A further announcement will be made in due course.
Rotala Plc 0121 322 2222
John Gunn, Chairman
Simon Dunn, Chief Executive
Kim Taylor, Group Finance Director
Shore Capital 020 7408 4090
Tom Griffiths / James Thomas / Michael McGloin (Corporate Advisory)
Henry Willcocks (Corporate Broking)
About the business
Rotala provides a range of transport solutions, ranging from local bus
services under contract to local authorities, through to commercial bus
routes. Rotala has operations at Heathrow Airport, in the West Midlands and in
the North West. Operating companies are Diamond Bus Ltd, Diamond Bus (North
West) Ltd, Hallmark Connections Ltd and Preston Bus Ltd.
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