‘Unforgivable’: Property tycoon Robert Tchenguiz blasts First Group management amid calls for sale of US assets
Directors at First Group have been branded “immature” by major investor and property tycoon Robert Tchenguiz, as shareholders demanded the struggling transport giant launch a full strategic review and sell off its US businesses.
The bus and rail operator is in the process of selling its US coach service Greyhound, but said earlier this year it would make its two other American bus businesses a major focus.
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But Tchenguiz, who has a nearly five per cent economic interest in First Group, and private equity firm Coast Capital, which is a 10 per cent shareholder, have both demanded it sell the rest of its US assets.
Tchenguiz said: “Clearly, the rationale of a vibrant US business which is being managed in Aberdeen, six time zones away, is not the most effective or efficient management strategy.”
Shares in First Group fell 20 per cent on Thursday after it wrote down the value of its Greyhound business by £124.4m, as its continued trying to sell it. Chairman David Martin told shareholders he was “looking at all options” regarding the other businesses.
But in a broadside against First’s management, a furious Tchenguiz said this statement was “ambiguous, confusing and misleading”.
He told Morning Wire that on Friday he had asked Martin to announce a formal strategic review of the business – with a view to selling off the US assets – in a bid to boost shares again, but that Martin had refused.
Tchenguiz said this was “unforgivable”.
The colourful British-Iranian property magnate, who shares a £20m mansion in Kensington with his 27-year old Polish girlfriend, his ex-wife and their two children, added that the refusal was “very immature to be honest”.
He threatened to call an extraordinary general meeting of shareholders to settle the matter, adding that he would do “whatever it takes to present stakeholders with transparency and more importantly, value creation opportunities”.
Tchenguiz’s economic interest in the firm is 4.7 per cent, but this only amounts to a 0.02 per cent direct shareholding.
His demand was reiterated this afternoon by Coast Capital, the activist investor which forced out former First Group chairman Wolfhart Hauser over the summer.
In a market announcement, the firm said: “Coast Capital believes that a formal and transparent strategic review is in the best interest of all investors, and their fellow stakeholders.”
First Student and First Transit accounted for 60 per cent of the company’s operating profit in the financial year 2019.
However, both Tchenguiz and Coast cited an analyst note by Royal Bank of Canada, which said in June that if the remaining US bus businesses were sold, it could more than double the price of First’s shares.
In response, First Group said: “We note Mr Tchenguiz’s comment concerning our North American assets and in particular the sale of a competitor.
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“First Student and First Transit are valuable assets and well positioned in markets with profitable growth.
“The board has been consistent and clear that the objective is to realise value and therefore were a credible and deliverable offer to be received for these or any other business in the portfolio then, of course, the board would give that serious consideration.”
(Main image credit: David M. Benett/Dave Benett/Getty Images for de Grisogono)