Crucial meeting today
Second shareholder likely to oppose FirstGroup board
FirstGroup is under pressure to ditch rail
A second shareholder has called for the removal of key members of the FirstGroup board ahead of a crucial meeting today that could determine the future of the transport company.
Columbia Threadneedle is supporting resolutions brought by activist investor Coast Capital to replace seven directors including the chairman and chief executive whom they accuse of lacking the required strategy for the business. Schroders is also said to be edging towards joining the rebel shareholders.
Schroders and Columbia, which own around 9% and 10% of the FTSE 250 group respectively, will oppose the re-election of chairman Wolfhart Hauser. Together with Coast they own 30% of the company.
New York based Coast is seeking the removal of six of FirstGroup’s 11 directors, including Hauser, and plans to replace them with its own nominees, such as former Tory transport minister Steve Norris as chairman.
Coast is opposed to FirstGroup’s bid for the West Coast partnership rail franchise backed by Italy’s state-owned Trenitali.
FirstGroup is said to be favourite for the contract but Coast is demanding the Aberdeen-based company exits British rail, describing it as “destructive of capital”. James Rasteh of Coast has threatened to sue the company, and to “hold each member of management team and board member personally and fully accountable” if FirstGroup accepts any new rail franchise.
The franchise bidding and shareholder action coincides with First’s recent review in which it appeared to bow to pressure and said it may leave the rail industry as it had “concerns with the current balance of risk and reward being offered” in rail. It is also planning to offload its UK bus operations, and sell the Greyhound coach business in the US.