Activist investor Coast Capital has hit out at First Group for making alleged “defamatory attacks and false statements” in the pair’s public slanging match over the transport giant’s strategy.
Coast, First Group’s largest shareholder, has issued a 24-page rebuttal to claims made by First earlier this month, in which it called the investor an “opportunistic, self-interested player that is only interested in short-term gains”.
It also accused Coast of a “scatter-gun, inconsistent and unusual proposals”.
Coast, which holds a near 10 per cent stake in the transport giant, has called for a radical shakeup of the company, including that it splits its UK assets from its US assets, withdraw from Britain’s rail industry and overhaul its board.
First caved to the demands when it announced plans to sell parts of its operations, including its Greyhound coach business. It has also vowed to focus on First Student and First Transit, its core US bus divisions .
Coast had also been calling for an extraordinary general meeting to vote on the removal of six current directors and the appointment of seven of its own nominees.
“FGP’s defamatory attacks and false statements about Coast have been a predictable
demonstration of a chaotic and unqualified management team with a long track record of value destruction,” Coast said.
“Coast believes that real and lasting cultural and organisational change are needed more than ever at FGP. The only way to effect such change is through the appointment of highly qualified, diverse board members who have the requisite experience in surface public transport and a thoughtful plan which will create sustained long term value for both investors and other stakeholders.
“None of FGP’s current board members have essential prior experience in surface public transport, despite FGP’s suggestions to the contrary.”
Coast said the current strategy presented by First’s chief executive, Matthew Gregory, is “nearly guaranteed to destroy value for investors”.
“The proposed fire sale of the UK bus operations, which the company has run into the ground, is a clear admission by management that they are unequipped to operate surface transport businesses. “
The shareholder added: “As a result, analysts have already begun to downgrade the stock, investors remain dismayed, and the stock has lost nearly 15 per cent of its value since the CEO’s presentation. Coast eagerly looks forward to the opportunity to vote in favour of a new board, comprising qualified and independent directors, who can usher in a new and productive era of operational excellence, value creation, and growth for the company.”
A spokesperson for First said: “Coast’s plans are inconsistent and irresponsible. They would leave the group with higher debt and they are not in the best interests of all shareholders or our wider stakeholders.
“Their aim is to seize control of the board of a UK-listed plc without paying a premium. Their documents continue to demonstrate numerous factual inaccuracies and misunderstandings about FirstGroup and our markets, despite the many detailed and clear explanations we have provided them.
“We have set out our strategy, which is based on facts and knowledge of the business. We are delivering that, at pace, with a diverse and independent board who have the skills and backgrounds to address the future needs of transport.”