Member Info for wealthtrasfer

Maybe he could cash them it at a £1 and rent them to shorters ready for the next award. Winner winner.

Unbelievable that LTIP awarding £1.7m share options at 47p. No wonder he doesnt buy any shares.

Edit my error on rereading: they can’t bid less than the highest price they paid in the last 12 months

They can’t bid lower than the lowest price they paid in the last 12 months so they would have to wait until this time next year to bid 50p. If we are still at 50p in a year then things are not going to look good anyways

For me we would be much better focusing on one core market and doing it well. Either sell off whole US and UK , pay off some debt and reinvest in Alsa to further grow and diversify with the European network where management can really deliver or sell off UK and Alsa and focus, invest and list in US. Either one would deliver great returns and a better managed and valued business. Why wait years for macros, contract renegotiation, refinancing, etc… the problem I see is a geographically diversified business which hasn’t got sufficient scale or capital or management ability to do well in all markets at once. Focus and grow on what you’re good at or in the us where there are huge opportunities for growth and a financial system to back that opportunity. We are going to languish around trying to do all things averagely and without the capital to deliver.

P.s. I think the misery will end, one way or another, in the next 6-9 months. Not too long now.

JG - my thoughts are that the belief, hopes and trust have firmly gone now and we are at the stage where no one is buying in to a story of recovery until solid news confirms it. So its going to drift until its underpinned by something to drive buyers back in to a recovery. Looks like a bit of a wait now until end Aug.

I assume that the TA won’t be as keen to take control of the transport once they’ve figured out the cost of doing so. MCG is I’m sure fully aware that the old model is now broken and a cost plus is the way to go or other such mechanisms that protect them from inflationary pressures.

My hope there is that if the network cannot be operated for a reasonable margin then we would do well to sell the infrastructure and assets and operate under a franchise or exit. What is the point of maintaining low margin high risk contracts. Put the money, assets, people to use elsewhere such as coach or preferably sell the UK business and invest in US School Bus / Transit (or reduce debt).

Fitch - June 2024

MCG's rating continues to benefit from good diversification and large scale, with a strong position in the US school bus, transit and shuttle businesses and the Spanish and UK coach and bus markets. The Stable Outlook reflects our expectation of deleveraging from 2025 and management's public commitment to the investment-grade rating. We thus believe mitigation actions will be forthcoming if business performance is weaker than expected.

MCG's plan to sell the US school bus business is not factored into Fitch's rating case due to uncertainty on its timing and sale proceeds.

Fitch - June 2024

Spain's Strong Growth Potential: Strong long-haul revenue growth, benefitting from improved passenger demand, yield increase and new contracts have lifted Spain division's current run-rate revenue 40% above pre-pandemic levels. We expect this business to be a key growth driver for MCG, adding annualised revenue of around GBP400 million over the next three years. Key risks remain competition from high-speed rail, intercity concessions renewals (scheduled in 2026 with potential further delays) and wage inflation.

Fitch - June 2024

DERIVATION SUMMARY

Compared with FirstGroup plc (FG, BBB/Stable) MCG is better diversified in geography with key operations across the US, the UK, Spain and Germany and has a higher share of contracted revenue, and therefore a stronger business profile.

MCG's credit profile has weakened as a result of slow recovery of profits post-pandemic. However, its EBITDAR net leverage should remain compliant with its investment-grade rating with an average of less than 4.0x over the next three years.

Mule - Thats the first time Ive read your comments making any sense. Yes you are correct it is down to a sale of assets, whether NA School Bus or otherwise, or potentially a raise in 18 months. You seem to have come to grips with the fact that MCG has assets to sell, the next step is to understand that it has options of assets to sell that will wipe out its debt entirely and still have assets left over to operate and continue.

And yes the share price is reflecting the speculative nature of the what asset will sell, when and for how much. But that is a temporary state until an asset is realised.

Consider if ZUM is recently valued at $1.3B for an operation 1/6th of the size and reach of the business that MCG operates in NA then there is a lot of opportunity to reduce debt there. US Transit (WeDriveU) still available separately worth hundreds of millions more and recovering well in 2024.

UK bus stated by Fitch as also recovering in 2025.

German Rail should stabilise and may surprise to the upside with write backs following renegotiation of the contractual cost recovery and/or a recovery of provisions around £10m p.a. albeit the contract on RX lots is going to be low margin.

ALSA is producing strong profits and continuing to grow well. Fitch saying that there should be another £400m of growth just in ALSA alone over the next 3-4 years.

Cost cutting of c. £40m this year and £50m next year, along with CapEx reduction opportunities to conserve cash also recognised by Fitch. Organic growth to reduce debt is noted as going to be a struggle but not impossible and considered would take longer on its own than the stated target of 2027.

Fitch have stated that they believe MCG to most likely continue to remain investment grade over the next 3 years. That includes the specific reference to allowance for the Hybrid Bond reset date and rate.

I used to think that it could get taken out at £1.80 to £2.00 but obviously no longer think that is the case. Unless NASB sale is done before a bid or as a pre-condition of a bid, at the high end of expectations, then it could.

I cant see long term holder / II's being interested in much less so I would think the NASB deal is key to a move in terms of timing and price.

Long term holders will have the highest averages.

For the last 9 months this has become a battle of shorts vs Cosmens and as I said before, Cosmens will win. Whether long term holders are satisfied is the great unknown!

Im not connecting them. But as a Spanish bank they may be open to dialogue with a Spanish takeover. I would think politically this would be of interest. It doesnt really matter who it is as Cosmens have shown they can get large chunks of shares off market. They will easily get to 30% if they wanted to!

They only have to do a deal now with one of the spanish banks such as Inersis and they are there. No doubt they want to nudge a bit closer first. If we see another 2% + over the next week or so then I think theres a bid incoming:

European Express Enterprises Ltd 21.08 %

Inversis Gestión SGIIC SA 6.380 %

Northern Express Enterprises Ltd 3.001

If the board could find £30m after the Grupo purchase it would be well spent on acquiring their authorised share purchase limit of 60m shares. Then what?

They can get to 30% very soon in concert. Maybe can go another 3%-4%. If they can keep hoovering up the shorts then if this turns on NASB sale then there will be a squeeze and re-rate. Its pretty close now to a change in direction.