Coast Capital believes that FirstGroup, as a leading provider of public transportation services in the UK, must achieve its potential and become the best-managed and most profitable operator in the industry. On a margin basis, the Company currently ranks lowest among its peers – as reflected in the share price performance. This is reflective of a board which must be materially improved, and a CEO who has failed the company for long enough. We propose the following changes to the board:
Voluntary Resignation of CEO Matthew Gregory
Two years ago, Matthew Gregory presented his plans to sell the UK assets of the company and retain the North American operations to maximize value. Given the board’s decision to pursue a different path, Coast Capital and fellow shareholders request that Mr. Gregory resign and be replaced by a CEO of industry competency, as soon as possible. We are further requesting that shareholders be represented on any such executive committee formed for the purpose of considering such replacement.
Voluntary Resignation of Board Member Julia Steyn
Given Ms. Steyn’s background as an investment banker and North American transportation specialist, her performance as a board member is disappointing to Coast Capital and our fellow shareholders. We note that Ms. Steyn did not vocally advocate the securing of a fairness opinion before voting to sell FGP’s prized North American assets at a discount to book value. As a result, there was a decline in share value. Furthermore, the disposal of North American operations means that her background is no longer required by FGP, and it would be prudent to replace her with an expert in UK transportation. Finally, Ms. Steyn has consistently turned a blind eye to the board’s fiduciary shortcomings and breaches and has demonstrated no independence of thought.
Voluntary Resignation of Board Member Warwick Brady
Mr. Brady is a board member of eight years whose service has had no positive material impact on the Company. Coast Capital has identified various other independent board members to be appointed to the board. These accomplished individuals enjoy our every industry confidence in their ability to ensure an ethical and operationally successful leadership at FGP in coming years.
We believe that following the sale of First Student and First Transit (FSFT), the board and management must establish an actionable plan to restore and enhance shareholder value. We will be making further recommendations as we continue to seek to improve the performance and value of FirstGroup.
Coast Capital is a New York-based fundamental investor that takes a Private Equity approach to deeply undervalued European-listed Equities.