A MAJOR investor in FirstGroup has called for the removal of its chairman Wolfhart Hauser and five other board members as it delivered a stinging critique of their leadership of the Aberdeen-based bus and rail giant.
Coast Capital, which has built up a 9.7 per cent stake in FirstGroup, claims the “existing leadership team has a track record of value destruction and under-performance, which is partly due to their inexperience in the surface transport industry”.
The investor, which said FirstGroup has seen 75% wiped off its value since 2010, has lodged a requisition notice calling for the board to convene an extraordinary general meeting for the purpose of removing the current directors. It said it has lined up a “highly experienced, inspired and motivated bench of candidates” with transport sector and turnaround expertise to replace them.
James Rasteh, founding partner of Coast Capital, said: “FirstGroup is a leading business in a profitable industry, and should be the fastest growing, most profitable, and most valuable player in the sector – as it has been historically. It is currently valued at less than 3.5 times depressed EBITDA (earnings before interest, tax, depreciation and amortisation) against peers at nearly eight times.
“The existing leadership team has a track record of value destruction and under-performance which is partly due to their inexperience in the surface transport industry. Indeed, the stock has seen its value decline by well over 75% since 2010, while peers have gone from strength to strength.”
FirstGroup responded by saying in a statement: “The board of FirstGroup are focused on delivering shareholder value and are confident that the company has the right team with the right experience and plans in place to do so. The board regularly reviews its composition to ensure it maintains an appropriate balance of skills and expertise, and new board members have been added, as recently as earlier this month.”
It added: “FirstGroup considers the views of all shareholders and, accordingly, will continue to engage with Coast Capital having attempted to do so constructively for more than a year. The company’s engagement with Coast Capital has included detailed responses to several proposals and has involved a number of meetings with the chairman and with senior management.”
FirstGroup noted that Coast Capital’s proposed resolutions would see six of the current 11 directors removed, to be replaced by seven of the investor’s nominees.
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