FirstGroup has announced a rights issue worth £615 million to try and reduce debts of almost £2 billion.
Announcing preliminary results for the year, FirstGroup said that although trading was ‘in line with expectations’, the company needed to raise capital to allow it to deliver on its plans for investment and return it to profitability.
The rights issue will raise funds by offering existing shareholders the opportunity to purchase discounted shares.
The company also announced that no final or interim dividend would be paid after seeing pre-tax profit fall by 86.7 per cent and net debt rise by 7.7 per cent to £1.98 billion.
FirstGroup chief executive Tim O’Toole said: “We have clear plans in place for all of our divisions, and while there remains significant work to be done, our confidence continues to grow as a result of the progress to date.
“The proposed £615m capital raising transaction we are announcing separately today will remove the constraints from our balance sheet and enhance our ability to invest in our businesses going forward.”
Chairman Martin Gilbert has also announced that he is to step down after 27 years at the company.
