FirstGroup chief quits day after top investor calls for his exit

(Reuters) -FirstGroup Chief Executive Matthew Gregory plans to step down in September, the British transport company said Tuesday, a day after its biggest shareholder called for his resignation in the wake of a contentious asset sale.

U.S. fund Coast Capital, which owns a roughly 15% stake in FirstGroup, had opposed the recently completed sale of the company’s U.S.-based FirstStudent and FirstTransit businesses to Swedish group EQT, arguing the price was too low.

Gregory said his resignation wasn’t linked to Coast Capital’s demands. “We’ve delivered this transaction … so I think it’s a new chapter in FirstGroup’s history, and I think its the right time for me to move on,” he told Reuters.

New York-based Coast was not immediately available for comment outside regular business hours.

FirstGroup named Chairman David Martin – who was nominated to the company’s board by Coast Capital in 2019 – as interim executive chairman until Gregory’s replacement is found.

FirstGroup also announced higher annual earnings. Annual adjusted operating profit rose 46% year-on-year to 101.9 million pounds ($141 million), partly helped by cost cuts. The figures reflect only its remaining UK bus and train businesses and the U.S. Greyhound bus service.

The group said it expects passenger numbers to recover to between 80% and 90% of pre-pandemic levels, from the current 60%, during the first year after the end of social distancing restrictions on public transport.

“We’re expecting that after the summer the economy will begin to reopen and people will get back to a more normal way of life,” Gregory said.

FirstGroup, which has also put up Greyhound for sale, remains in talks with potential bidders but the process has been affected by the pandemic as the service is running at around half its normal levels, he added.

Shares in the group, a member of the FTSE 250 index of mid-range stocks, were down 1.3% by 0821 GMT.

($1 = 0.7245 pounds)

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