Nat Ex chews over cash call after big fine

AILING transport group National Express is eyeing a &pound;350m cash call, it emerged yesterday, as the troubled group seeks to rebuff takeover bids.<br /><br />The move, which has received shareholder support, comes after the government last month stripped the company of its East Coast rail franchise when it warned it could no&nbsp; longer afford the &pound;1.4bn franchise fee.<br /><br />It is hoping to shore up its balance sheet after last week reporting it lost more than &pound;20m on the East Coast line in the first six months of the year. <br /><br />A rights issue would be a knock to bidders for the business, which include the Spanish Cosmen family and private equity firm CVC. Rival Stagecoach is also believed to be considering a bid for the group. <br /><br />Last week, National Express reported first-half pre-tax losses of &pound;48.1m, down from &pound;52.4m in profits from the same period the year before.<br /><br />Its exit from the East Coast route has led to warnings that National Express could be stripped of its remaining franchises: c2c and National Express East Anglia. National Express has said the government cannot legally take its remaining franchises away. <br /><br />There has also been heavy criticism of the franchise system, with those opposed to it saying it is too easy for companies to hand back loss-making lines. The group is also searching for a new chief executive after Richard Bowker resigned in the wake of the East Coast line scandal.<br /><br />National Express is being advised by Merrill Lynch and Morgan Stanley.<br /><strong><br />FAST FACTS NATIONAL EXPRESS<br /></strong>The group made a pre-tax loss of &pound;48.1m in the first six months of 2009, down from a profit of &pound;52.4m last year. <br />Its East Coast Main Line franchise is set to go back into public ownership later this year.