Sustainable Business

FirstGroup chief quits day after top investor calls for his exit

3 minute read
  • Gregory says resignation not linked to Coast Capital's demands
  • Coast welcomes 'long overdue' resignation
  • FirstGroup names Chairman Martin as interim executive chairman
  • FY adjusted operating profit up 46% to 101.9 million pounds

July 27 (Reuters) - FirstGroup (FGP.L) Chief Executive Matthew Gregory plans to step down in September, the British transport company said Tuesday, a day after its biggest shareholder called for his resignation in the wake of a contentious asset sale.

U.S. fund Coast Capital, which owns a roughly 15% stake in FirstGroup, had opposed the recently completed sale of the company's U.S.-based FirstStudent and FirstTransit businesses to Swedish group EQT (EQTAB.ST), arguing the price was too low. read more

Gregory said his resignation wasn't linked to Coast Capital's demands. "We've delivered this transaction ... so I think it's a new chapter in FirstGroup's history, and I think its the right time for me to move on," he told Reuters.

Founding partner at New York-based Coast James Rasteh said: "We welcome his long overdue resignation and look forward to many other necessary changes."

FirstGroup named Chairman David Martin - who was nominated to the company's board by Coast in 2019 - as interim executive chairman until Gregory's replacement is found.

FirstGroup also announced higher annual adjusted operating profit of 101.9 million pounds ($141 million), helped by cost cuts. The figures reflect only its remaining UK bus and train businesses and the U.S. Greyhound bus service.

Peel Hunt analyst Alexander Paterson said the results beat his expectations, driven by outperformance at Greyhound, where losses have narrowed.

FirstGroup, which has put up Greyhound for sale, remains in talks with potential bidders but the process has been affected by the pandemic as the service is running at around half its normal levels, Gregory said.

The group said it expects passenger numbers to recover to between 80% and 90% of pre-pandemic levels, from the current 60%, during the first year after the end of social distancing restrictions on public transport.

"We're expecting that after the summer the economy will begin to reopen and people will get back to a more normal way of life," Gregory added.

Shares in the company, a member of the FTSE 250 index (.FTMC) of UK mid-range stocks, reversed course to trade up 1.3% by 1004 GMT.

($1 = 0.7245 pounds)

Reporting by Yadarisa Shabong in Bengaluru Additional reporting by Sarah Young in London Editing by Kirsten Donovan and David Holmes

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