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FirstGroup rakes in £122 million from US property deal

FirstGroup runs buses throughout the UK, including in the company's home city.
FirstGroup runs buses throughout the UK, including in the company's home city.

Scottish transport giant FirstGroup has cashed in £122 million after completing the sale of all but two of its remaining Greyhound US properties.

The Aberdeen company also announced today that a £75m share buyback programme will be up and running from Monday.

FirstGroup announced the sale of its iconic Greyhound intercity coach business in North America, to to German group FlixMobility for £151m, in October last year.

The property deal that has just been completed with US real estate investor Twenty Lake Holdings was flagged in September.

FirstGroup sold its North American Greyhound intercity coach business. Image: FirstGroup

Legacy Greyhound assets and liabilities are expected to generate around £8m in net cash for FirstGroup 2023-24 and beyond.

Before then, about £140m will be booked for the 2022-23 trading year after foreign exchange hedging costs.

FirstGroup said proceeds from the property sale would help to decarbonise its UK bus fleet and maintain its “progressive” dividend policy.

The may also fund new “targeted investment in strategically and financially accretive growth opportunities” for UK regional bus operations.

FirstGroup is in a strong financial position, with a balanced capital allocation policy and a clear strategy.”

Graham Sutherland, chief executive, FirstGroup.

The share buyback programme will end no later than December 18 2023, subject to market conditions.

It is aimed at reducing the number of issued shares in the firm, with the acquired stock being cancelled at a later.

FirstGoup has also repurchased some of its bonds, worth £15.7m, in a move expected to reduce debt financing costs by around £1m per annum from December 2022 onwards.

FirstGroup is now focused on UK operations, including its South Western Railway network.

Chief executive Graham Sutherland said: “FirstGroup is in a strong financial position, with a balanced capital allocation policy and a clear strategy.

“We are well-placed to play a key role in the decarbonisation of public transport, make targeted investments in adjacent UK growth opportunities and to deliver value to our shareholders, including through the share buyback programme we have announced today.”

FTSE 250-listed FirstGroup is the second-largest regional bus operator and biggest rail firm in the UK.

The company employs more than 30,000 people and carries around 1.5 million passengers across its networks every day.

International private equity house I Squared Capital Advisors walked away from a potential £1.3 billion-plus takeover of the firm earlier this year.