Troubled National Express Group shares see falls on news Cosmen-CVG Capital consortium deal is off. Cosmen nevertheless backs NatEx equity fundraising. NatEx attempts to stabilise shares by announcing NatEx has a “strong future” with a “compelling case for investment”. Stagecoach no longer in discussions with the consortium over bus & rail purchases.
What future, then, for NatEx?
- What frightened the Cosmen consortium into backing out, after a whole month of examining NatEx’s books?
- What will investors who will be asked to stump up fresh equity make of the consortium’s decisions?
- Are NatEx’s rail uncertainties insurmountable?
- Will this inevitably lead to a fire sale, similar to those elements already sold?
- Could Stagecoach still pick up a bus or coach bargain, independent of the consortium?
5 comments:
The FT reported yesterday that it was the size of NatEx's loans including "a £490 million loan that matures next September."
Time to look down the back of the sofa me thinks...
Seems that the fat lady is still some way off. Amonngst other things
Stagecoach is looking in to an offer.
http://www.telegraph.co.uk/finance/newsbysector/transport/6344012/National-Express-to-go-it-alone-as-CVC-and-Cosmen-family-drop-765m-bid.html
http://www.telegraph.co.uk/finance/newsbysector/transport/6351595/Stagecoach-considers-merger-with-National-Express.html
Reports I've read do indeed suggest that it was the rather dire Yellow Bus situation in the US subsidiary, together with the less-than-drastic actions being taken to fix it, that was causing most concern...
I can't say I'm entirely convinced - with a Cosmen family member on the Nat Ex board, they should already have been fully aware of this, or any other problem which may have raised its head during due dilligence...
Methinks there is something here not being told...
For what it is worth, I heard that it was CVC's bankers that had problems with the size of the loan and the size of the debt burden.
I think that the main problem for the business is with the rail franchises. The coach network is unlikely to suffer massively from new competitors as they are looking to grow the coach market.
The bus side is profitable and will continue to be, with competent management. This is the main carrot for Stagecoach.
Ultimately it will be decided by the large investors, so rather than a suitable fit for existing bus operators, any takeover will be decided by a large cash/share bid.
The big money, is in the rail business. Risk is what yields reward. The coach and bus stuff is small fish by comparison. Plain vanilla stuff that can tick along nicely, East London buses style. On the other hand it's going to be difficult to extract large amounts of cash from it to service short term borrowings (remember British Bus underinvestment?)
National Express have no foreseeable future in the UK Rail market, which is what gets investors excited. They are unlikely to have much of a future in their present form.
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