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October 22, 2009    

National Express issues profit warning and announces £350m rights issue

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by Kay Murchie

Bus and train operator National Express has today issued a profit warning and is to proceed with a £350 million rights issue within weeks to strengthen its balance sheet as it struggles under a mountain of debt totalling almost £1 billion.

Analysts say the rights issue will be completed before Christmas. Meanwhile, the company said trading conditions “remained difficult” during the third quarter.

The company is considering a £1.7 billion offer from rival Stagecoach after a Spanish-led consortium withdrew its £765 million offer last week for the rail and bus group.

Stagecoach, the operator of South West Trains and East Midlands Trains, has made a new all-share offer for its rival, following the withdrawal of the Spanish-led consortium, which comprised private equity firm CVC Capital and National Express’s largest shareholder, the Cosmen family.

National Express has been the subject of takeover speculation since it unveiled a loss of £20 million in the first half of 2009 on its east coast route.

Meanwhile in a bid to boost trade, the company is offering coach fares for under £1.

Commenting on today’s announcement, chief operating officer, Ray O’Toole, said: “This is not what we would call a profit warning. What we have said is that profits will be slightly below previous expectations. Obviously we have a rights issue coming and we wanted to be as transparent as possible.”

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Tags: National Express, offer, profit warning, , riva, slash fares, Stagecoach


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