FirstGroup, a struggling transportation provider, has obtained a welcome cash injection from the sale in the United States of three major properties of its Greyhound intercity bus business.
The Scottish firm said it would make a net profit from the three deals of about £ 73 million. The cash proceeds for “general corporate purposes.” will be used.
The transactions come at a time when FirstGroup is dealing with decreasing passenger numbers in the aftermath of the coronavirus pandemic, like the rest of the transportation industry. Earlier this month, for the six months ended Sept. 30, the train and bus operator announced a pretax loss of £ 100.1 million and warned of “continued material uncertainty” around its operations.
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The new divestments follow Geyhound’s exit in the first half of the fiscal year from six smaller surplus locations. FirstGroup, which aims to divest its U.S. school bus, transit and motorcoach operations, is streamlining its portfolio of Greyhound assets by moving to ‘better tailored to consumer needs’ intermodal hubs or other facilities.
The largest of the recent transactions is the sale to an affiliate of the U.S. real estate investment trust, Prologis, of the garage and customer terminal facility in the Downtown Arts District of Los Angeles, California. Greyhound will earn cash worth $88 million (£64.4 million) and lease back the facility for two years. Greyhound would complete the relocation of its terminal to a more convenient location during that period and its garage to a smaller, more suitable location.
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For net proceeds of $7 million (£5.1 million), the other two divestments include properties in Denver, Colorado, and Ottawa, Ontario. The customer terminal in downtown Denver has shifted to Union Station, while operations at the Ottawa garage have been relocated as part of the removal of Greyhound from some areas of Canada in 2018/19.
FirstGroup added that “a number of other real estate sales processes are also underway.” FirstGroup shares ended Thursday’s trading session marginally higher at 74.1p, as the London market closed earlier for the New Year holiday.