An activist investor in First Group is furious that it has not been allowed to attend the transport company's full-year results meeting tomorrow.
First Group is locked in a boardroom battle with US hedge fund Coast Capital, which owns a 9.7 per cent stake in the firm and is its largest shareholder.
Coast has demanded a radical overhaul of the company’s structures, including that it split its UK assets from its US assets and withdraw from Britain’s “destructive” rail industry in a bid to return to profit.
It is also seeking to remove six of the 11 current directors and replace them with seven of its nominees. Those it is targeting include chief executive Matthew Gregory and chairman Wolfhart Hauser.
In an email sent by First Group to Coast, seen by City A.M., an employee states that “in the current circumstances, the company does not consider it appropriate for you to attend our results meeting in person”.
The company says it has previously offered to arrange a meeting with Coast following the results, as is “consistent with what we do for the company’s other large shareholders”.
Coast founding partner James Rasteh said the group’s refusal to invite it to the results meeting attended by other shareholders amounted to a “total breach of corporate governance”.
“In my quarter-of-a-century investor experience I’ve never seen anything like this,” he told City A.M.
A spokesperson for First said: “We have already offered Coast Capital a meeting, as we do with all our major investors, and in keeping with our attempts to engage constructively with them over the past year. Coast Capital’s position is clear, as they have requisitioned a separate shareholder meeting on their proposals which seek to take control of the board of First Group by removing six of the current directors and appointing seven of their own nominees. In the meantime we intend to release our full year results and update on progress and strategy in the usual way.”
First is one of the largest bus operators in the UK and also runs services in the US, where it serves 43 states.
In the UK, it runs three rail franchises – Great Western Railway, South Western Railway (SWR) and TransPennine Express – and is bidding for the West Coast Partnership franchise, which is due to be awarded in the summer.
First has endured a torrid year after its former boss Tim O’Toole stood down last May after the firm posted a £327m annual loss.
The company’s last trading statement in January showed that its bus operations in the UK overcame a drop in passenger volumes, but its rail growth slowed because of strikes taking place on SWR.
Russ Mould, investment director at AJ Bell, said: “First’s shares are up 40 per cent from their December lows, but at 111p trade miles below their 2007 all-time high of more than 800p, which may explain why Coast feels FirstGroup is ripe for a shake-up.”