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FirstGroup fully exits North America with $172m Greyhound sale

By Josh White

Date: Thursday 21 Oct 2021

FirstGroup fully exits North America with $172m Greyhound sale

(Sharecast News) - FirstGroup announced the sale of Greyhound Lines to a wholly-owned subsidiary of FlixMobility on Thursday, completing its stated strategy to focus on its UK public transport businesses.
The FTSE 250 passenger transport operator said the transaction resulted in cash consideration of $172m (£124.63m), comprising $140m paid initially, with $32m in unconditional deferred consideration paid in instalments over 18 months

Greyhound properties with an estimated net market value of about $176m would be retained by FirstGroup and initially be leased back to Greyhound at market rates, but were expected to be sold over the next three to five years

FirstGroup said it also retained some 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, as well as grant receivables, buyout premia and other items estimated at a net cost of $47m.

Against those, the company said it had retained $197m of proceeds from the sale of First Student and First Transit earlier in the year

The $140m of initial cash proceeds would be retained to support the close-out of those legacy liabilities and related net costs, with the balance of the property proceeds and deferred consideration resulting in $178m in net value being realised over time.

FirstGroup said the transaction was not subject to any closing conditions, and would complete on Thursday.

"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," said executive chairman David Martin.

"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."

Martin said the agreement regarding Greyhound's future completed the group's portfolio rationalisation strategy, which had refocused FirstGroup on its 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."

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