Stagecoach Group plc: Acquisition from Coach America

 
TIDMSGC 
 
Stagecoach to acquire businesses and assets from Coach America 
 
Stagecoach Group plc is pleased to announce that certain of its subsidiaries 
(together, "Stagecoach") have agreed to acquire selected businesses and assets 
from Coach America, Inc. ("Coach America"). 
 
Coach America is a major operator of bus and coach services in the United States 
and has been operating under Chapter 11 bankruptcy protection since January 
2012.  The transaction is subject to the approval of the United States 
Bankruptcy Court of Delaware ("the Court"), which is overseeing the Chapter 11 
process.  The Court's approval is expected by 22 May 2012. 
 
Stagecoach has agreed to acquire: 
1. Certain businesses and related assets and liabilities, for a cash 
consideration of US$134.2m (approximately  GBP85m) and; 
2. at the option of the Sellers, up to 85 further coaches for a cash 
consideration of up to US$25.6m (approximately  GBP16m). 
 
Some US$16.0m of the consideration has already been paid as a refundable 
deposit, with the balance being due on or around the completion of the 
transaction. The consideration payable will be potentially adjusted based on the 
working capital balances of the businesses to be acquired. 
 
In addition to the requirement for the Court's approval, the transaction is 
subject to certain other conditions, including regulatory approvals, and is 
expected to be completed within three months. 
 
In the year ended 31 December 2011 and applying Stagecoach accounting policies, 
the businesses to be acquired for US$134.2m generated estimated revenue of 
US$164.4m, EBITDA of US$24.6m and operating profit of US$13.3m, after taking 
account of estimated central overheads relating to the businesses. The estimated 
gross assets of the businesses are US$92m. 
 
The businesses being acquired include contract, line-run, charter and 
sightseeing operations. The transaction enables Stagecoach to acquire selected 
businesses at an attractive price and to acquire vehicles as part of its capital 
expenditure programme. 
 
The businesses to be acquired include operations in Texas and California, which 
will provide depot infrastructure to enable Stagecoach to expand its megabus.com 
budget coach network more efficiently, more quickly and under its full control, 
whilst avoiding the need to pay a sub-contract profit margin in these locations. 
In addition, Coach America's Atlanta business is the existing sub-contractor of 
the megabus.com Atlanta hub and that business is amongst those to be acquired. 
 
The nine businesses being acquired are located in: 
- San Antonio and Dallas, Texas 
- Sacramento, California 
- Anaheim, California 
- Atlanta, Georgia 
- Cleveland, Ohio 
- Gillette, Wyoming 
- Elko, Nevada 
- Hanover, Maryland 
- Portland, Oregon 
 
The transaction will be financed from available, undrawn, committed bank 
facilities. 
 
Stagecoach Group Chief Executive, Sir Brian Souter, said: "Our North American 
division is the fastest growing part of the Group and this transaction will 
allow us to acquire selected businesses and vehicles at attractive prices in 
markets and regions we know well. These businesses will benefit from both our 
management expertise and ability to invest for growth. 
 
"We see significant potential to roll-out megabus.com's successful package of 
low fares and high quality service to new locations in the United States. The 
acquisitions in Texas and California in particular will give us an extended 
geographic footprint to accelerate our growth strategy for the brand, which 
already covers around 80 key locations in North America." 
 
Stagecoach is not currently seeking to acquire any other businesses or assets of 
Coach America. 
 
For further information, please contact: 
 
Analysts 
Martin Griffiths, Finance Director - 01738 442111 
Ross Paterson, Director of Finance & Company Secretary - 01738 442111 
 
Media 
Steven Stewart, Director of Corporate Communications- 07764 774680 
 
Notes to Editors 
 
Stagecoach Group 
  * Stagecoach Group is a leading international public transport group, with 
    extensive operations in the UK, United States and Canada. The company 
    employs around 35,000 people, and operates bus, coach, rail, and tram 
    services. 
  * Stagecoach is one of UK's biggest bus and coach operators. Around 2.5 
    million passengers travel on Stagecoach's 7,700 buses every day on a network 
    stretching from south-west England to the Highlands and Islands of Scotland. 
    The company's business includes major city bus operations in London, 
    Liverpool, Newcastle, Hull, Manchester, Oxford, Sheffield and Cambridge. 
  * Stagecoach is a major UK rail operator, running the South West Trains, 
    Island Line and East Midlands Trains networks. It has a 49% shareholding in 
    Virgin Rail Group, which operates the West Coast inter-city rail franchise. 
 
  * Stagecoach also operates the Supertram light rail network in Sheffield. 
  * In North America, Stagecoach operates around 1,900 buses and coaches in the 
    United States and Canada. Budget coach service megabus.com links more than 
    80 key locations in North America. Stagecoach is also involved in operating 
    commuter and transit services, as well as tours, charters, sightseeing tours 
    and a small number of school bus services. 
 
 
 
 
 
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     originality of the information contained therein. 
 
Source: Stagecoach Group PLC  via Thomson Reuters ONE 
[HUG#1613192]