US private equity investor Coast Capital on Monday escalated its war on First Group as it called for the resignation of the transport firm’s chief executive Matthew Gregory, along with two other board members.
Coast, which owns about 14% of the UK-listed company, has been critical of First group’s $4.5bn disposal of its First Student and First Transit bus operations in the US to Scandinavian fund EQT.
It said that Gregory, who became chief executive in 2018, should “resign and be replaced by a CEO of industry competency, as soon as possible”.
Coast Capital added that board members Julia Steyn and Warwick Brady should also tender their resignations.
The deal closed last week after 61 per cent of investors at a meeting in May voted for the sale. First Group then boosted shareholder returns by 37% to £500m, using a portion of the proceeds from the sale.
Although it had long pushed for the firm to sell First Transit and First Student, Coast said that the deal was a “most imprudent business decision” and proposed alternatives.
On Monday Coast said Steyn’s “consistently turned a blind eye to the board’s fiduciary shortcomings and breaches and has demonstrated no independence of thought”.
“We note that Ms. Steyn did not vocally advocate the securing of a fairness opinion before voting to sell FGP’s prized North American assets at a discount to book value.
“As a result, there was a decline in share value. Furthermore, the disposal of North American operations means that her background is no longer required by First Group, and it would be prudent to replace her with an expert in UK transportation.”
In response First Group said the sale of First Student and First Transit “achieved a full strategic value that looks beyond the pandemic”.
“The transaction, now approved by a majority of shareholders, enables the Group to return £500m of value to all shareholders, address its long-standing liabilities and make a substantial contribution to the pension scheme deficits.
“We consistently engage on a variety of topics with all our major shareholders. We have carefully considered Coast Capital’s various outline and initial ideas for the business over time.”
