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Has anybody done the calculation of what it needs to be worth, i.e the value of FGP after the sale?
The question is what is a standalone UK train and bus operator worth. The answer....put your finger in the air.
By about 30p I suppose, but knowing FGP probably more like 50p!!
This share fall has been horrendous since the news of the sale of US operation,I have Gone from profit to a 15% loss,I wonder how much further It will fall after the 30p return to share holders
Seems to be a lot of mixed opinion on this board. Given that the company has not paid a dividend for 8 years, isn’t a 30 p per share special dividend a good thing for shareholders?
It works out at about 3.75 p per share, per year over the 8 year period. The company comes out with a clean balance sheet after a tough couple of years and can look forward to the future and rebuild.
There has been no coronavirus rights issue here and presumably the sale would all but eliminate the possibility of this in the short term. Despite this the share price has not yet returned to its pre coronavirus level, so it still looks like a potential recovery play.
Bus and Rail is likely to become more important in the UK over the next 10 years as the government steers the country towards a greener economy and net carbon zero. There could also be a bumper couple of years ahead as the economy powers out of recession and pent up demand is unleashed in the leisure and tourism sector.
Johnam - I disagree. The board have been a disaster for years, especially CEO who signed many of the rotten rail franchises and has missed margin targets. I have been a shareholder of FGP since 2013, I am a long term holder but have no confidence that the management will deliver long term.
Seems to me the Coast Capital proposal stinks. Closer to asset stripping FGP and leaving an indebted rump of a zombie company rather than a healthy, well financed company with prospects. I'm with the board and staying here long term.
Depends how much gets returned to shareholders in the future. Based on the companies prior performance of delivering on strategies assuming that the company will hit its margin or dividend targets is wide of the mark. For me I would definitely have preferred to have got a nice 80p pay-out and a more leveraged rest of the company. Or an IPO of the US operations. Or probably even not breaking up the group at all. This deal seems to offer shareholders nothing but selling off the crown jewels and getting 30p and a weak remaining company in return.
Personally, I would rather invest in a company that is in a sound financial position moving forward than one who weakens itself by carrying more debt just to appease shareholders by giving them a larger slice of the proceeds. The short term gain would/could be more than offset by being in a worse financial shape.
Daily Telegraph
Where have you read this? Thanks
Coast Capital reject deal...game on.
@Paultheman
I think if you look at this sector as a whole, there is a good chance you will get your £1.46 back in the future, as public transport will be an important sector post COVID.
Yes FGP will be much smaller post the sale of its US operations, but there will be chances for it to grow again once it’s not so indebted. A loss is only a loss when crystallised, and I don’t see FGP going to the wall, and believe it will push on now.
I too hold these in my isa. I can't imagine that any investors are up on them .For me they have just been a money pit over the years with so many false dawns.
There was the 3 for 2 rights in2013 at which the then CEO of 27 years resigned, but the next lot couldn't do any better. I just don't believe there is any future in transport shares ( I also hold gog) and reckon they will all eventually be nationalised.
When is this shareholder meeting? Broker has upgraded this to a buy raising price to £1.00
@Paultheman12: I've read your post and it reminded me of my stupid investment(gamble) into iGas...
Got in at the height of it and then it started to go down. Now please note, I do get there is no comparison between iGas and FGP and equally investing in FGP certainly wasn't stupid whereas iGas certainly was...
What resonated with me was that you say you've been waiting for 8 years to get your money back. I also waited 8 years for a recovery and eventully sold out and took £5k from an initial £75k investment after just seeing it go down. What hurt it was also in my ISA, so I paid the taxes on it and can't claim anything back for the loss.
Now again, iGas had no hope to recover and FGP is different.
But the other thing that resonated with me is that you seem to believe it won't recover. Here you are in a better place than I was, because I still had hope(how foolish was I) and that kept me in.
But if you believe it won't recover why not sell it rather now?
Let's say you have £10k left.
If this will only go down in your eyes, why not sell this now because remember you already made the loss. If you sell now and buy back straight away, you'll see you are where you are now with the exception of the stampy duty charges...
One big thing that hindered me was the believe it wasn't a loss till I sold..Which I realised later was nonsense. It's already gone.
In that time I put about £6k in VW, it was a tiny amount but I did so because my logic was I cannot afford to lose more so can't take risks. When I did that I still had about £45k left that I would have received had I sold iGas. What's interesting is in the years that followed, think it was about 4 years or so, VW doubled and iGas went down to eventually £5k...
No imagine I sold iGas instead, put the £45k that was left into VW then today I would not only have made my money back, I would have been better off...
I so badly regret my bizarre fixation with my loss and that as a result I allowed my investment to go further and further down when in that same time if I sold it which would not have meant losing anything as it was already gone and invested it elsewhere, even just a tracker fund then I would at the very least have retained what I had left.
There was countless other opportunities. It reminds me off someone whose wife left them, then they cry and cry about the loss as if that will bring her back only to wipe their eyes out 8 years later and think oh crap, live has passed me by and I could have dated many other women since or whatever...
Now again, FGP may well recover, it is nothing like iGas, I will not go the same route as iGas which was so dumb to invest in and even dumber to hold.
Ask yourself, if you have £10k left, is this the best place to keep it? Is there another place where if you put it now where you think it could grow more? Wish I asked myself that question. Just something to think about. I wish I did back then.
In your statement you mentioned the word" future" . Can you honestly say that you feel first will recover from this. I'm my opinion they won't. Yes the share price might go up a little in months to come , but as I've said previously I think lots of shareholders are thinking the same way that I am , and that's is to cut the losses. If it reaches £1 I'm out for good and that's me with an average of£1.46. there's only so much bad news I can take. I've been holding and hoping for 8+ years and it's probably the biggest and hopeless investment I've ever made .
PYUECK it may have been possible to achieve a higher headline price by going down the IPO route however there would have been additional risks and costs associated with that route. FGP have covered themselves to some extent with the First Transit earn out clause. There is no doubt they have not achieved the full asset value however given the market it was maybe the best they could get at the current time. The distribution plan is fairly sensible, they are clearing the decks for the future. I am sure the major institutional investors will have a view but doubt they will pull plug on deal but we will see. For me the issues going forward are what level of rail dividend (profit) will they make and how realistic is the 10% target margin on the road business. For FGP to be valued at say £1.00 it would need to generate circa £120m EBITDA at a P/E ratio of 10, the payment of a dividend may allow a higher P/E ratio and subsequent SP. There are still a lot of unknowns and do suspect we may see management changes to take FGP forward in future.
This deal sucks for shareholders. 30p for shareholders in return for the crown jewels, with only a very ropey few businesses left. It is a bad deal struck by a bad CEO.
I have always been in favour of the group disposing of its US operations, but not with this structure of return to shareholders. Shareholders would be better off if the US business was IPO'd in the US with FGP shareholders being able to take some of the shares. A lot more of the debt should have been passed to US operations when sold. It's common practice in the US to load companies coming up for an IPO with debt and let the seller take the proceeds and offload the debt. In this deal FGP seems to have got the proceeds but mainly used it to pay off debt.
The deal stinks and we need a better one. I am going to reject it when it comes up for a shareholder vote, me alone won't make any difference but I suspect other shareholders must also be doubting its merits.