TIDMFGP 
 
FIRSTGROUP PLC 
                         SALE OF GREYHOUND LINES, INC. 
 
FirstGroup plc ('FirstGroup' or the 'Group') announces the sale of Greyhound 
Lines, Inc. to a wholly-owned subsidiary of FlixMobility GmbH ('FlixMobility') 
(the 'Transaction'), completing its stated strategy to focus on its leading UK 
public transport businesses. 
 
  * The Transaction results in cash consideration to the Group of $172m, 
    comprising $140m paid initially, with $32m in unconditional deferred 
    consideration paid in instalments over eighteen months 
  * Greyhound properties with an estimated net market value of c.$176m will be 
    retained by FirstGroup; they will initially be leased back to Greyhound at 
    market rates but are expected to be sold over the next three to five years 
  * FirstGroup also retains certain legacy Greyhound net liabilities, including 
    pension, self-insurance, and finance leases settled at closing, which in 
    total were valued at $320m as at 27 March 2021, as well as grant 
    receivables, buyout premia and other items estimated at a net cost of 
    c.$47m, against which the Group had retained $197m of proceeds from the 
    sale of First Student and First Transit earlier in the year 
  * The $140m of Greyhound initial cash proceeds will be retained by the Group 
    to support the close-out of these legacy liabilities and related net costs, 
    with the balance of the property proceeds and deferred consideration 
    resulting in c.$178m (c.£128m) in net value for the Group being realised 
    over time 
  * The Transaction is not subject to any closing conditions and will complete 
    today 
 
Commenting, David Martin, FirstGroup Executive Chairman said: 
"Greyhound is an iconic business which has been at the heart of North American 
life for more than a century, through its unique national network which 
connects communities across the continent. We are proud of the significant 
developments we made to Greyhound's business model during FirstGroup's 
ownership, including the introduction of express point-to-point routes, 
real-time pricing and yield management and a transformed customer offering and 
experience. 
 
"This transaction realises an appropriate value for Greyhound's operations and 
ensures Greyhound's legacy liabilities are suitably managed. Today's agreement 
regarding Greyhound's future completes the Group's portfolio rationalisation 
strategy which has refocused FirstGroup on its leading UK public transport 
businesses with a strong platform to create sustainable value going forward. 
 
"I want to thank the management and employees of Greyhound, who have remained 
steadfastly dedicated to providing the best possible service for their 
customers despite the challenges of the pandemic. I am confident their 
commitment to high standards of service for customers will be sustained and the 
business will continue to strengthen and develop in future under its new 
ownership." 
 
Jochen Engert, Founder and Chief Executive Officer of FlixMobility, said: 
"The continuous expansion of our network through partnerships and acquisitions 
has always been an integral part of our growth strategy to build our global 
presence. The acquisition of Greyhound is a major step forward and strengthens 
FlixBus´ leading position in the US. The FlixBus and Greyhound teams share a 
common vision to make smart, affordable and sustainable mobility accessible to 
all." 
 
Background to and reasons for the Transaction 
FirstGroup has previously set out its objective to rationalise the Group's 
portfolio of businesses in light of the limited synergies between its UK and 
North American divisions, and today's Transaction follows the sale of the 
Group's other North American businesses, First Student and First Transit, to 
EQT Infrastructure in July 2021. The Transaction provides clarity for 
Greyhound's customers, employees and stakeholders and we believe that its new 
owners are well placed to support the continued development of Greyhound going 
forward. 
 
Effects on FirstGroup 
In the near term, FirstGroup intends to use the initial cash proceeds of the 
Transaction together with the remaining cash set aside from the sale of First 
Student and First Transit to accelerate the de-risking of the Greyhound 
self-insurance liabilities and settle the finance leases, with discharge of the 
remaining pension liabilities to follow in due course. The $32m in deferred 
unconditional consideration, property value of $176m and CARES/ARP grant 
collections are expected to be realised over time, resulting in c.$178m (c.£ 
128m) in net value for the Group, which may be considered for potential 
supplementary returns to shareholders or for other opportunities in future. 
 
The Group expects to record a gain on disposal in the current year accounts as 
a result of today's Transaction, with further profits on sales of the property 
portfolio to be realised in future. 
 
Following today's announcement and with certain First Bus capital expenditure 
payments now falling after the period end and better than expected working 
capital flows, the Group estimates that adjusted net debt1 at the end of the 
current financial year will be c.£80-90m lower than previously expected, in the 
range of £10-20m. 
 
Trading in the Group's continuing businesses year to date has been in line and 
there is no change to management's expectations for the current financial year 
as outlined in the full year results announcement on 27 July 2021. FirstGroup 
intends to publish results for the first half of the financial year on Thursday 
9 December 2021. 
 
Information regarding Greyhound 
Greyhound is the only nationwide operator of scheduled intercity coach services 
across the United States, as well as operations into Canada and Mexico. Its 
iconic brand has been a mainstay of the North American transportation landscape 
for more than a hundred years. Greyhound's fleet of 1,300 vehicles and 2,400 
employees provide services connecting 1,750 destinations across North America. 
For the 52 weeks to 27 March 2021, Greyhound Lines, Inc. reported revenue of 
$422.6m (£323.0m), EBITDA of $37.4m (£27.3m) and an adjusted operating profit 
of $1.8m (£1.3m)2. The gross assets the subject of the Transaction as at 27 
March 2021 were $193.8m (£141.5m). 
 
Information regarding FlixMobility 
FlixMobility is mobility provider, offering new alternatives for convenient, 
affordable and environmentally friendly travel via the FlixBus and FlixTrain 
brands. With a unique approach and innovative technology, the company has 
quickly established Europe's largest long-distance bus network and launched the 
first green long-distance trains in 2018 as well as a pilot project for 
all-electric buses in Germany, the US and France. Since 2013, FlixMobility has 
changed the way hundreds of millions of people have travelled throughout Europe 
and created tens of thousands of new jobs in the mobility industry. In 2018, 
FlixMobility launched FlixBus USA to bring this new travel alternative to the 
United States. 
 
Further Transaction details 
 
Greyhound assets and liabilities inside the Transaction perimeter 
FirstGroup has reached agreement with Neptune Holding Inc. (the 'Buyer'), a 
corporation 100% controlled by FlixMobility, to sell Greyhound Lines, Inc., the 
US Greyhound operating business (including its vehicle fleet, trademarks, and 
certain other assets and liabilities) for an enterprise value on a debt-free / 
cash-free basis of c.$46m plus unconditional deferred consideration of $32m 
with an interest rate of 5% per annum. A further $1.5m may also become payable 
contingent on specific agreement of a particular property lease. 
 
Greyhound has now received both tranches of cash grants under the US Department 
of the Treasury's Coronavirus Economic Relief for Transportation Services 
('CERTS') scheme, totalling $108m, or c.$7m higher than initially anticipated, 
which will be retained by Greyhound Lines Inc. and spent on its operations in 
accordance with the terms of the grant. Recognising its resulting cash balance 
and c.$14m in debt and debt-like items being assumed by the Buyer, the cash 
proceeds received by the Group from the Buyer at closing as a result of the 
Transaction is $140m, with the $32m in unconditional deferred consideration (to 
be received in regular instalments from the Buyer over the next 18 months or 
sooner) resulting in consideration payable of $172m. 
 
Greyhound property assets and legacy liabilities outside the Transaction 
perimeter 
Greyhound-related property holdings in the US (the 'Retained Properties') with 
an aggregate estimated net market value of c.$176m are not part of the 
Transaction with the Buyer and will be retained by FirstGroup. The Buyer has 
entered into lease agreements to use the Retained Properties as part of 
Greyhound's future operations at market rental levels. The majority of these 
are subject to a three-year lease term, with the remainder subject to a 
six-month initial term followed by six-month rolling terms. FirstGroup intends 
to monetise all of the Retained Properties over time to further optimise net 
proceeds. 
 
As previously indicated, Greyhound also remains eligible to receive further 
funding awards from other US federal schemes such as the CARES Act and the 
American Rescue Plan ('ARP'), and, to the extent that further recoveries are 
made under these schemes which relate to losses incurred while Greyhound was 
under the Group's ownership during the pandemic, the Buyer will pay equivalent 
amounts to FirstGroup. 
 
In addition to the Retained Properties, FirstGroup will also retain certain 
other Greyhound liabilities, including Greyhound's self-insurance reserve 
liabilities up to the date of closing (valued at $151m as at 27 March 2021), 
the Greyhound defined benefit pensions schemes (valued at $144m as at 27 March 
2021), finance leases (valued at $25m as at 27 March 2021 that have been 
settled on closing) and certain environmental and other liabilities and costs. 
Greyhound is currently in the process of completing the closure of its 
activities in Canada and these do not form part of the Transaction; as such the 
Group retains all the assets and liabilities relating to this business 
(including its defined benefit pension scheme, legacy insurance liabilities and 
real estate). As noted at the full year results, $197m of the First Student and 
First Transit sale proceeds was set aside to de-risk these liabilities, and 
since then the Group has made an initial payment of c.$102m into the Greyhound 
pension schemes in the US and Canada to begin that process. 
 
FirstGroup has a strong track record of actively managing Greyhound's property 
holdings for value, such as the sale of three Greyhound properties for gross 
proceeds of $137m and a profit on sale of c.$100m announced in December 2020. 
FirstGroup has realised aggregate proceeds of Greyhound-related property of 
$400m over the last 10 years through 30 property transactions of $1m or more in 
value. 
 
Contacts at FirstGroup: 
Faisal Tabbah, Head of Investor Relations 
Stuart Butchers, Group Head of Communications 
Tel: +44 (0) 20 7725 3354 
corporate.comms@firstgroup.co.uk 
 
Contacts at Brunswick PR: 
Andrew Porter / Simone Selzer, Tel: +44 (0) 20 7404 5959 
 
Contacts at Goldman Sachs International: 
Sole Financial Advisor and Joint Corporate Broker 
Eduard van Wyk and Bertie Whitehead, Tel: +44 (0) 20 7774 1000 
 
Further notes 
 
                                                                                $m 
 
Enterprise value of Greyhound Lines, Inc., on debt- and cash-free basis         46 
payable at closing 
 
Unconditional deferred consideration for Greyhound Lines, Inc. payable          32 
over 18 months 
 
Enterprise value of Greyhound Lines, Inc. on debt- and cash-free basis3         78 
 
Estimated net position to be realised over time: 
 
Enterprise value of Greyhound Lines, Inc., on debt- and cash-free basis         46 
payable at closing (from above) 
 
Cash on Greyhound Lines. Inc. balance sheet                                    108 
 
Debt and debt-like items on balance sheet transferred to Buyer                (14) 
 
Net cash proceeds payable at closing for Greyhound Lines, Inc.                 140 
 
Unconditional deferred consideration for Greyhound Lines, Inc. payable          32 
over 18 months (from above) 
 
Net cash proceeds payable for Greyhound Lines, Inc.3                           172 
 
Estimated market value of Retained Properties, to be realised over             176 
three-to-five years 
 
Cash proceeds plus estimated realisable market value of Retained               348 
Properties3 
 
Total net legacy liabilities initially retained as at 27 March 2021: 
 
- Self-insurance provision                                             (151) 
 
- Pension deficit                                                      (144) 
 
- Finance leases settled at closing                                     (25) 
 
- Other estimated net liabilities (CARES/ARP receivables, Canada,       (47) 
buyout premia/deal costs, environmental, etc) 
 
- Proceeds from sale of First Student and First Transit set aside to     197 
manage Greyhound liabilities 
 
Estimated net cost to discharge retained net liabilities                     (170) 
 
Estimated net position to be realised over time, following property            178 
sales, discharge of legacy liabilities3 etc 
 
 
1  'Adjusted net debt' excludes First Rail ring-fenced cash and IFRS 16 lease 
liabilities from net debt, as defined in the FY21 results. 
 
2   'Adjusted operating profit' is stated before gain on disposal of 
properties, strategy costs, self-insurance provision charge and certain other 
items. 'EBITDA' is earnings before interest, tax, depreciation and 
amortisation, calculated as adjusted operating profit less capital grant 
amortisation plus depreciation. 
 
3   Excludes a further $1.5m in consideration which may become payable 
contingent on specific agreement of a particular property lease. 
 
All '$' or 'USD' amounts are United States dollars. 
 
Goldman Sachs International is authorised by the Prudential Regulation 
Authority and regulated by the Financial Conduct Authority and the Prudential 
Regulation Authority. Goldman Sachs International is acting exclusively for 
FirstGroup and no one else in connection with the Transaction and will not 
regard any other person (whether or not a recipient of this announcement) as a 
client in relation to the Transaction and will not be responsible to anyone 
other than FirstGroup for providing the protections afforded to Goldman Sachs 
International's clients nor for giving advice in relation to the Transaction or 
any other arrangement referred to in this announcement. 
 
FirstGroup plc (LSE: FGP.L) is a leading private sector provider of public 
transport services. With £4.3 billion in revenue and around 30,000 employees, 
our UK divisions transported nearly 700,000 passengers a day in the 52 weeks to 
27 March 2021. First Bus is the second largest regional bus operator in the UK, 
serving two-thirds of the UK's 15 largest conurbations with a fleet of c.5,000 
buses. First Rail is the UK's largest rail operator, with many years of 
experience running long-distance, commuter, regional and sleeper rail services. 
We operate a fleet of c.3,750 rail vehicles on four contracted operations 
(Avanti, GWR, SWR, TPE) and two open access routes (Hull Trains and Lumo, our 
new East Coast service launching later in 2021). We create solutions that 
reduce complexity, making travel smoother and life easier. Our businesses are 
at the heart of our communities and the essential services we provide are 
critical to delivering wider economic, social and environmental goals. We are 
formally committed to operating a zero-emission First Bus fleet by 2035 and to 
cease purchasing further diesel buses after 2022; and First Rail will help 
support the UK Government's goal to remove all diesel-only trains from service 
by 2040. Visit our website at www.firstgroupplc.com and follow us 
@firstgroupplc on Twitter. 
 
Legal Entity Identifier (LEI): 549300DEJZCPWA4HKM93. Classification as per DTR 
6 Annex 1R: 2.2. This announcement contains inside information. The person 
responsible for arranging the release of this announcement on behalf of 
FirstGroup is David Isenegger, Group General Counsel and Company Secretary. 
 
 
 
END 
 
 

(END) Dow Jones Newswires

October 21, 2021 02:00 ET (06:00 GMT)

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