Train and bus business FirstGroup has launched a scathing attack on the company’s biggest shareholders, calling them an “opportunistic, self-interested player that is only focused on short-term gains”, as bosses attempt to stave off a boardroom coup.
US activist investor Coast Capital has a 9.7% stake in FirstGroup and wants to vote off six of 11 members of the company’s board – including the chief executive and chairman – replacing them with seven of their own representatives.
On Tuesday, FirstGroup said Coast’s demands to split UK and US assets and quit the rail industry were “inconsistent” and “irresponsible” – as it confirmed a meeting for shareholders to vote on the new board members will take place on June 25.
Bosses said Coast’s planned new board members did not have sufficient experience and had “put forward plans that are inconsistent, demonstrate a lack of understanding of FirstGroup and are rooted in the past”.
They added: “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.
“Based on its many interactions with Coast Capital to date and its claims and proposals, the board believes that Coast Capital is an opportunistic, self-interested player that is only focused on short-term gains.”
Coast has demanded a radical overhaul of the company’s structures, including that it split its UK assets from its US assets and withdraw from Britain’s “destructive” rail industry in a bid to return to profit.
Last week, FirstGroup agreed to sell its US Greyhound bus business and is looking to separate its UK bus group, although bosses insisted the decision is nothing to with pressure from Coast.
On Tuesday, the company turned its attentions firmly on Coast, calling the fund’s statements “scatter-gun, inconsistent and unusual”. They also warned that Coast could install an unnamed chief executive in a “further abuse of good corporate governance”.
On the substance of Coast’s demands, FirstGroup said plans to sale and lease back property would be “irresponsible”, causing more debt.
It added that calls to leave its UK rail franchises – Great Western Railway, South Western Railway (SWR) and TransPennine Express – “pays no regard to the contractual nature of these arrangements”.