National Express shareholders approve £360 million rights issue

Beleaguered British transporter National Express Group Plc has secured support from majority of its investors yesterday to go ahead with the company's £360 million ($596 million) rights issue, despite the opposition from its largest stakeholder, Spain's Cosmen family.

In an extraordinary general meeting held yesterday, the proposed rights issue was backed by about two-thirds majority, while Jorge Cosmen,  the vice chairman was supported by less than one per cent of the votes other than the shares held by his family. 

National Express chairman John Devaney, the main proponent of the rights issue said investors that the importance of the rights issue to the group and its future prospects can not be overstated as the company is struggling with its huge debt burden.

The Group's net debt as at 30 September 2009 was approximately £1.1 billion. Through the rights issue the company plans to pay down its debt under its Euro Bridge facility, and reduce the debt gearing ratio to below 3.5 times EBITDA.

A fortnight ago, National Express announced an equity fundraising scheme following the failure of the CVC-Cosmen bid, and later the all share merger offer from rival Stagecoach. The scheme involves a fully underwritten 7 for 3 rights issue of about 357 million new ordinary shares at a price of 105 pence a share, to raise approximately £360 million.

Last month, a consortium comprising CVC capital partners and Cosmen family withdrew from their £765 million bid for the ailing transporter, apparently due to its concerns over refinancing of the company's debt and other issues. (See: CVC-Cosmen consortium pulls out of bid for National Express; Stagecoach bids £1.7 billion)