The group, which shocked the market on Monday by announcing the £615m plan to defend its credit rating, will add up to 722m new shares to its existing 482m, heavily diluting investors.
Analysts at UBS warned that the discount, with shares being sold at 85p compared to last week’s 225p closing price, “could reflect the limited shareholder appetite for capital injections”.
Meanwhile analysts at Espirito Santo applauded the move as “grasping the nettle, finally”.
FirstGroup will use the £585m net proceeds to pay down £215m of its debt pile, and put the rest towards its turnaround plan. It said it will consider using the money earmarked for debt payments to fund acquisitions instead.