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National Express launched a hugely discounted rescue rights issue today without the support of its major shareholder and deputy chairman.
Stricken National Express, £1.1 billion in debt, in breach of its banking covenants, stripped of its most lucrative rail business and unable to find a takeover white knight, is raising £360 million from a seven-for-three rights issue.
The fundraising, priced at 105p a share, a 69% discount to where the shares closed last night and comparing with a 500p takeover offer the business received in the autumn, will cost the company £15 million, or a historically high 4% of the total raised in City underwriting fees and advice.
However, the fundraising has been made more difficult by the bombshell that Jorge Cosmen, the trains and coaches group's deputy chairman and speaking for about 18% of the shares will not be backing it.
In a statement, National Express was forced to concede: “Whilst the board has resolved to proceed with the rights issue, one of the directors, Jorge Cosmen, did not vote in favour of the relevant board resolutions required in connection with its implementation.
“Mr Cosmen has advised the board that he feels, in accordance with his duties as a director of the company, that the rights issue is not in the best interests of the company and all shareholders.”
Cosmen, whose family runs National Express's coaches and buses interests in Spain, had previously signalled he would support a rights issue “within certain parameters”.
It would appear those parameters have not been met for a man who a month ago was trying to engineer a takeover of the company in league with the private-equity house CVC and rival trains group Stagecoach.
National Express chairman John Devaney said the board is going ahead with the rights issue anyway: “We have substantial confidence in our future.”
Reader views (1)
In circumstances like this the question arises as to in WHOSE best interests is rebuffing a takeover and pursuing a rights issue at a cost of £15m? Is it in the best interests of keeping the existing directors in control and in their jobs or is it in the best interests of the shareholders backing directors who've been part of the management leading the company to where it desparately is now?
- David Mg, Walsall UK, 12/11/2009 20:44
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