Scottish transport giant FirstGroup seals £100m deals as part of Greyhound coach overhaul
FirstGroup, the Aberdeen-headquartered transport operator, has sealed end-of-year deals totalling more than £100 million as it restructures the iconic US Greyhound coach business.
The three major property-related disposals will result in total gross proceeds of $137m (£102m), the firm told investors.
The largest deal involves the sale of Greyhound’s “oversized legacy” garage and customer terminal in the downtown arts district of Los Angeles to a subsidiary of Prologis.
Under the agreement, Greyhound receives $88m in cash and will lease back the facility from Prologis for two years, during which time the coach business will complete the moves of its terminal to a “more convenient and attractive location for customers”. The garage operations will relocate to a “more appropriately-sized site elsewhere”.
The other two property disposals involve facilities in Denver, Colorado for net proceeds of $37m and in Ottawa, Ontario for net proceeds of $7m.
In total, all three properties’ book value was $24m as of the end of September, resulting in a total profit on sale for all three transactions of some $100m – net of leaseback, property tax and selling costs. The cash proceeds will be used for “general corporate purposes”.
FirstGroup said: “These transactions are a further step in the group’s rationalisation of the Greyhound property portfolio for value, reducing the operational footprint by moving operations to intermodal transport hubs or new facilities better tailored to customers’ needs.
“The transactions follow the exit of six smaller surplus locations in the first half of the financial year. A number of other property sales processes are also underway.”
The Hogmanay announcement comes after the group recently posted narrower losses as it adjusted to reduced numbers of journeys amid the pandemic.
Bosses at the bus and rail giant described the first-half performance as “resilient” despite a substantial reduction in passenger volumes, reflecting travel restrictions and other pandemic effects.
The group’s UK operations, like those of other transport operators, are being subsidised under government support measures while many of its overseas operations are either fixed contracts or also receiving support.
Revenues in the six months to the end of September were down 12 per cent to £3.1 billion.
Operating losses were reduced to £16.4m from £118.1m a year earlier, which FirstGroup said was ahead of its expectations, helped by government support, “strong” cost controls and a recovery at its North American operations.
The group said its vast First Bus business in the UK was well-placed to play a key role in delivering “economic, social and environmental agendas including the transition to a zero-carbon economy”, echoing comments a day earlier by Scottish rival Stagecoach.
Coinciding with the first-half results announcement, FirstGroup said it had reached an agreement with the UK government over the termination of two rail franchises.
The Department for Transport has accepted that no payment is required in return for scrapping Avanti West Coast’s contract as the brand was “performing well prior to the pandemic”. But a contribution of £33.2m is required by the transport group to end South Western Railway’s (SWR) deal.
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