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FirstGroup fights off challenge from US investors

A CRUCIAL series of votes at an emergency general meeting of FirstGroup shareholders has ruled out its departure from the rail business in Britain, at least for now, but the chairman of First has resigned.

US investor Coast Capital, which has a 10 per cent holding, had tabled 13 resolutions at the meeting on 25 June, which called for six directors to stand down, including chief executive Matthew Gregory. It wants First to concentrate on its US bus businesses, First Student and First Transit, rather than rail franchises in Britain.

Coast Capital, a New York-based hedge fund, was supported by another US shareholder, Columbia Threadneedle, which also has 10 per cent, but shareholders rejected the motions by almost three to one.

First said they had ‘voted decisively against Coast Capital’s attempt to take control’, although more than 20 per cent had voted in favour of some of the proposals.

However, the removal of FirstGroup chairman Wolfhart Hauser was supported by 30 per cent, and although he has not been forced out, he has decided to step down.

He has supported the ‘clear path forward’ which was laid out by chief executive Matthew Gregory in May. This involves the sale of US bus operator Greyhound and the ‘separation’ of its British bus companies, although Coast described these moves as ‘too little too late’. Gregory, who was appointed in November last year, survived a motion calling for his departure when 75 per cent of shareholders supported him.

Departing chairman Wolfhart Hauser said he would not be standing for re-election at the company’s annual general meeting on 25 July, and has handed control to his colleague David Robbie, who becomes interim chairman.

The meeting is unlikely to have been the last word. Coast Capital said it would continue to fight for the board to be replaced, and described Hauser’s departure as a ‘constructive first step’. Coast said it ‘believes that FirstGroup needs and deserves a board which is populated with directors who have the relevant experience and who act to the benefit of all shareholders. We will continue to pursue this goal vigorously.’

A decision about the West Coast Partnership franchise is expected from the Department for Transport soon, and some sources say First is favourite to become preferred bidder. The changeover will happen in March, when Virgin and Stagecoach will surrender intercity services on the West Coast Main Line after 23 years.

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