Tim O'Toole, whose two-year reign as chief executive of FirstGroup has coincided with a share price collapse and a debt crisis, has publicly thanked shareholders for bearing the "burden" of the group's blockbusting £615 million rights issue.

Mr O'Toole told the annual meeting in Aberdeen: "I am extremely grateful that shareholders have expressed their faith in us by shouldering this additional burden this year to allow us to move forward, and extremely grateful I have a board of directors and a chairman willing to take on the challenge to make sure the right thing is done for the long-term future of the company."

FirstGroup's share price, which rallied to 260p last autumn when it won the aborted West Coast rail franchise, has collapsed from 220p in late May to 93p yesterday.

Mr O'Toole told the meeting the business was turning round its US student and UK bus businesses and meeting all the objectives he had promised a year ago.

He said: "We had plenty of liquidity, plenty of headroom under our banking covenants to complete the transformation, the thing we needed was the space and time with the ratings agencies that was provided to us by rail.

"When the West Coast debacle happened and the whole package of franchises collapsed and was extended into the future, the ratings agencies changed their view and it was forced onto management and this board."

He said that asset sales or accepting a credit downgrade had been rejected in favour of "continuing to invest in this company".

Chairman Martin Gilbert, who is standing down after 27 years at the firm, said afterwards: "That is what happens with share prices, they go too far one way and too far the other- this was a massive rights issue by any standard: £600m on a £1 billion market cap.

There are technical aspects, it will take a long time to digest this extra £600m, and in earnings per share terms people will want to see some evidence that there is some recovery coming through in UK Bus and (US) Student."

The chairman said new shareholders, previously deterred by the company's debt, would begin to look at the stock, and its re-rating "will be a gradual process".

On the prospects for the rail business, Mr Gilbert said: "The franchising process will restart and we will be in a good position- but it could be a while.

"Even if there was one now it would be a year to the start date, there is a big time-lag."

The group was negotiating new management contracts for two routes but "it doesn't make up for losing the West Coast" which had been a "body blow to the company and to morale", he said.

On Sir Richard Branson's battle to defend Virgin's franchise, he said: "If I was Virgin I would have done what they did... but we were really gagged, which gave Virgin a head start."

Mr Gilbert, who told The Herald last month that the company ought to have raised more equity when paying £1.8bn for Greyhound owner Laidlaw in 2007, said the board had originally planned to sell Greyhound to pay down debt but "everybody falls in love with Greyhound and we decided to keep it".

He went on: "Once we decided to keep it, we should have raised some money two years ago when Tim (O'Toole) took over but at that stage rail was in full cry, we had pre-qualified for West Coast – it has been pretty unlucky."

Mr Gilbert told some 50 shareholders at the meeting that the previous year had "actually been a period of solid performance across all five of our divisions".

Mr O'Toole said margins in the UK Bus could be doubled to 10% over four years.

"That may sound like a hairy plan, but when you consider our competitors have margins of around 12%, this it there for the taking."

First said like-for-like UK bus revenue was up 1.4% in the first quarter while rail was up 5.5%.