Union steps in as £360m pension row at FirstGroup escalates
Union Unite has spoken out against FirstGroup’s biggest investor, which wants to see proceeds for a recent sale at First Group given to shareholders, rather than used to plug the company’s pension deficit.
FirstGroup recently sold its US division First Bus for £3.3bn to EQT Infrastructure, a year after putting the business up for sale.
As a result of the sale, parent company FirstGroup is proposing to pay shareholders 30 pence a share as a bonus as well as spending £336m to plug the company’s pension deficit.
However, Coast Capital Management, FirstGroup’s biggest investor and one which has previously tried to purchase various FirstGroup divisions, is opposing the plan and is seeking to secure the support of other shareholders to oppose the pension payments.
Coast Capital have instead argued that the £336m should be paid to shareholders as a form of dividend.
According to Unite, its members are alarmed by Coast Capital’s proposals, and there is growing concern that if the pension deficit is not tackled, workers’ pensions could be in jeopardy.
Unite national officer for passenger transport Bobby Morton described Coast Capital’s actions as “despicable” and “a classic example of bandit capitalism”.
“Coast Capital are trying to line their own pockets, while jeopardising the retirement income of our members,” he continued.
“FirstGroup are doing the right thing in acting to plug its pension fund deficit and they should not be blocked from taking this responsible action.”
In a statement Coast Capital said: “We would like to make absolutely clear that we have never, at any time, put forward a proposal that would decrease contributions into the pensions plan, or to seek to reduce benefits to pensioners.
“In fact, more than two years ago we proposed that the company engage with a leading UK pension consultancy firm to structure great cash contributions and enhance the schemes for the immediate benefit of all stakeholders.
“Our opposition to the disposal to EQT is based on the transaction’s very unattractive terms, and its crystallisation of value destruction for all stakeholders, including pensioners.” Coast said it had invited Unite to “discuss areas of mutual interest”.
FirstGroup declined to comment.