Firstgroup took a step towards relieving the pressure of its debt pile by announcing a £300m debt issue yesterday.

Firstgroup took a step towards relieving the pressure of its debt pile by announcing a £300m debt issue yesterday.

The proceeds from the 10-year bond will be used to repay some of the debt from last year's takeover of US company Laidlaw, which is behind Greyhound coaches, that is due to mature in 2010.

The Aberdeen-based company raised £200m from investors when it first announced the £1.9bn takeover in February 2007 and sought another £240m from them in May.

FirstGroup, which runs the ScotRail franchise and has a range of bus and train interest in the UK and North America, is still sitting on some £1.9bn of debt, much of it due to be repaid in the next two years. At the time of the last fundraising, chief executive Moir Lockhead admitted that it should have sought extra funds when the deal was first mooted and equity markets were more resilient.

Acting finance director Nick Chevis said yesterday: "We are pleased by the success of the launch which attracted a large number of orders from a wide range of institutions.

"This will be our third bond issue and we are delighted by the continuing support from fixed income investors demonstrating the strength of the group. The launch represents further progression of our strategy to replace our short-dated acquisition debt in line with our refinancing forecasts."

Transport analyst Douglas McNeill, of Blue Oar Securities, said: "Some people have expressed concerns about the group's debt but I am not one of them. The balance sheet is in a good state, cashflow is quite strong and trading is good.

The issue is expected to close on September 19.

FirstGroup gained 0.5p yesterday to close at 584p.