School Bus Sale Bonanza?
Readers will be familiar with Bart Simpson's school bus which appears in a variety of styles ...
... but is always driven by Otto Mann.
His driving skills are legendary!
Well, news broke yesterday that First Group had sold its various school bus subsidiaries operating across the pond. School buses are very different over there from over here. Here we still may see any vehicle in any livery carrying the eager learners to the halls of academe.
In the US they are, of course, yellow with multiple flashing lights and, often ...
... with folding stop signs. You are not allowed to pass a school bus in either direction when it is loading or unloading!
Anyway, it is not long ago that First was intending to sell its UK businesses and grow the US market. Then, possibly because nobody wanted any of the UK businesses (at an acceptable price!), it made a corporate volte-face and a decision to keep the UK stuff and flog Uncle Sam's distinctive school transport.
Once this sale goes through, First will only have the Greyhound long distance coach business in the USA - and that might be a tad difficult to offload.
So who is the company that is doing the buying?
EQT buys and sell companies like fbb might buy and sell tank wagons - only fbb does no selling!. The aim is to assemble portfolios of companies with growth potential such that they will generate a good profit for investors. For those with money to invest, the deal gives the opportunity to spread their money around and hope that the companies doing well will outnumber those struggling.
Ordinary mortals like thee and fbb find this world of wheeler dealing on a huge scale both alien to our pensions and intellectually daunting. Here are just some of the funds (parcels of companies) that EQT operate.
And here are some of the businesses in Infrastructure IV, one of the boxes of companies that typically will soon contain the First's school bus operations.
And below is a small sample of what a couple of these companies do.
We can just about grasp fiber (fibre) optic internet; but some businesses are unfathomable to the man in the street.
The numbers in the First Bus deal are just HUGE!
£3.3bn headline enterprise value, including First Transit earnout of up to c.£170m
That is what EQT will be handing over in a large canvas sack.
Transaction fully recognises the long-term, strategic value of First Student and First Transit – headline multiple of 8.9x combined FY20 EBITDA (on a pre-IFRS 16 basis)
That is good news? Isn't it?
And this is SOME of what First intends to do with its new-found fortune.
£2,190m initial net proceeds (after deducting First Student and First Transit self-insurance liabilities valued at c.£390m and c.£505m in debt and debt-like items, net working capital and other adjustments) to be used in addressing longstanding liabilities, ensuring the Group has sufficient means for the future development of its retained businesses, and enabling a return of value to shareholders:
So paying off some of First's eye watering debt!
£1,345m to be used to reduce indebtedness (including £300m CCFF repayment to UK Government) and to de-risk other liabilities (including for North American legacy pensions and self-insurance)
So paying off some more of First's eye watering debt!
£336m contribution to the UK Bus and Group pension schemes (of which £116m to be held in escrow) enabling move to low dependency funding position
Topping up the pension pot for UK employees, a pot which may not have been enough to pay everyone what they hoped for! "Escrow" is a bag of pennies kept safe by a third party, so that First cannot snaffle it for general purposes.
£100m initial pro forma Retained Group net debt to ensure adequate financial resources are available
No idea!
£365m proposed return of value (30 pence per share) to shareholders during current calendar year
Ah! The shareholders are going to get a Brucie Bonus of a tiny fraction of the windfall. First shareholders have not fared well over the last few years.
The Times does not seem over-enthusiastic about the deal!
fbb, who "did" Economics up to "A" level and the higher level special paper (failed), thinks that The Thunderer is unduly gloomy. It must be positive to remove some of the huge burden of debt from First's Balance Sheet. Currently the "life support" from HMG is not really part of the equation. ALL transport businesses are on the same "life support".
Were fbb a shareholder with First, he might be happy to pocket a few 30ps (taxable, of course) but he would be further (slightly?) encouraged by the greater financial strength that this sack of moolah will bring.
And, in case you were wondering.
First Student :-
Big business eh?
The News You Have Been Waiting For
The Toy You Have All Been Waiting For
Not quite right for fbb's layout but a timely reminder that the Rev Wilbert Awdry's tales of Tanker Thomas have been going for 60 years. Why did fbb never read them when he was a callow youth of 16? Maybe they were just too exciting?
Something Special for Scarborough
From later this month Transdev Coastliner will be upping their service to Scarborough to a bus every 30 minutes. It used to be hourly plus express extras in peak summer.
There's no timetable as yet, but the buses themselves are announcing the uplift in frequency.
Continuing The Canopy Creation
Getting all eight "legs" vertical was a nightmare - a bit like plate spinning.
You get one leg vertical and glue the next. As you set the next in place, the first gently and gracefully topples over! Much muttering and poking during the several hundred hours it seemed to take. Then the bravest of all decisions - turn the canopy upright and see if it stands up.
And only one leg fell off. A bit more detailing is needed ...
Next Variety blog : Sunday 25th April
No idea what Thomas's diamond anniversary is supposed to represent, because the first stories appeared in print a lot earlier than that. The first book was in fact pre-nationalisation, and the Fat Controller was the Fat Director. My own copies aren't handy enough to check, but Wikipedia says it was published in 1945, which would be consistent. The foreword to one of the succeeding books explains the change of status from Director to Controller.
ReplyDeleteThe engine is to celebrate Thomas's 75th (diamond*) anniversary - so only slightly out with the Wikipedia date.
Delete* There are two diamond anniversaries, one at 60 and one for 75.
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DeleteHad me confused too. Thanks for the explanation. But perhaps it should be a Double Diamond anniversary (works wonders)*.
Delete*1970s beer and advertising slogan
Awdry's first Railway Series book ('The Three Railway Engines') was published in May 1945. The second, 'Thomas the Tank Engine', was published in September 1946.
ReplyDelete