FirstGroup urges investors to vote against Coast Capital's resolutions

FirstGroup has hit back at Coast Capital, arguing that the US-based activist investor's proposal to remove six of the current directors and replace them with seven of its own nominees is not in the best interests of shareholders.

Despite its opposition, the train and bus operator said in a statement on Tuesday that it will hold an extraordinary general meeting on 25 June to consider the resolutions of Coast Capital, which holds a stake of around 10% stake.

"The directors strongly believe that the Coast Capital resolutions are not in the best interests of the company, its shareholders as a whole or its wider stakeholders and recommend unanimously that FirstGroup shareholders vote against all of the Coast Capital resolutions," it said.

The company went on to say that the plans put forward by Coast Capital over the past 12 months were "scatter-gun, inconsistent and unusual".

"The latest plans put forward by Coast Capital are either based on financial engineering with no clear benefit to shareholders, such as its suggested sale and leaseback approach, or are vague assertions, based on old information and lacking in detail. Coast Capital’s proposal to reduce the company’s pension obligations, or to 'exit rail in full' without due regard to the contractual nature of the business, nor the employees or wider stakeholders within the business, are alarmingly naïve.

"These plans continue to demonstrate Coast Capital’s lack of understanding of the group and our businesses, notwithstanding the patient engagement that the company’s officers and board members have undertaken with Coast Capital."

FirstGroup said last week that it was planning to sell its Greyhound business in the US and separate its First Bus operations in the UK. The company said it would focus on its First Student and First Transit units in the US, which provide home-to-school student transport and outsourced transit management, respectively.

FirstGroup defended its new strategy on Tuesday, arguing that it was the right way to deliver the best value to all shareholders.

"It follows a full and comprehensive review over the past year of all appropriate means to mobilise the considerable value inherent in the group, in a process which recognised the friction costs, regulatory procedures and stakeholder consultations which require careful consideration in the case of some potential options.

"The best team to navigate these complex issues is the current management team of the company, which has deep experience of the company and the industry in which it operates and takes all of its responsibilities with the utmost seriousness."

At 1120 BST, the shares were down 2.1% at 107.60p.