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FirstGroup CEO steps down after pressure from Coast Capital
27th Jul 2021 07:02
(Sharecast News) - FirstGroup chief executive Matthew Gregory has decided to step down after pressure from major shareholder Coast Capital as the company swung to a full-year profit.
Gregory will leave the firm on September 13 and be replaced on a temporary basis by chairman David Martin. First Group posted an operating profit of £224.3m on a statutory basis from a loss of £299m a year earlier.
Adjusted operating profits were £209m, down from £256.8m as revenue fell by almost £1bn to £6.8bn. The company said it expects volumes to recover to between 80% - 90% of pre-pandemic levels during the first year after social distancing restrictions on public transport end.
New York-based Coast, which owns about 14% of the UK-listed company, on Monday called for Gregory's resignation, along with two other board members.
Coast has been critical of First group's $4.5bn disposal of its First Student and First Transit bus operations in the US to Scandinavian fund EQT, significantly undervaluing the business by selling it during the pandemic. The deal was eventually approved by shareholders in May despite the private equity firm's objections.
It said on Monday that Gregory, who became chief executive in 2018, should "resign and be replaced by a CEO of industry competency, as soon as possible".
The chief executive and a number of other board members survived a campaign in 2019 by the activist investor to oust them but Coast resumed its calls for Gregory to leave the company after the deal was announced.
Gregory said: "Having delivered the substantial portfolio rationalisation strategy and with FirstGroup now positioned to emerge from the pandemic as a resilient and robust business, I have decided the time is right for me to move on to new opportunities."
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.
Gregory will leave the firm on September 13 and be replaced on a temporary basis by chairman David Martin. First Group posted an operating profit of £224.3m on a statutory basis from a loss of £299m a year earlier.
Adjusted operating profits were £209m, down from £256.8m as revenue fell by almost £1bn to £6.8bn. The company said it expects volumes to recover to between 80% - 90% of pre-pandemic levels during the first year after social distancing restrictions on public transport end.
New York-based Coast, which owns about 14% of the UK-listed company, on Monday called for Gregory's resignation, along with two other board members.
Coast has been critical of First group's $4.5bn disposal of its First Student and First Transit bus operations in the US to Scandinavian fund EQT, significantly undervaluing the business by selling it during the pandemic. The deal was eventually approved by shareholders in May despite the private equity firm's objections.
It said on Monday that Gregory, who became chief executive in 2018, should "resign and be replaced by a CEO of industry competency, as soon as possible".
The chief executive and a number of other board members survived a campaign in 2019 by the activist investor to oust them but Coast resumed its calls for Gregory to leave the company after the deal was announced.
Gregory said: "Having delivered the substantial portfolio rationalisation strategy and with FirstGroup now positioned to emerge from the pandemic as a resilient and robust business, I have decided the time is right for me to move on to new opportunities."
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.