Stagecoach to acquire businesses and assets from Coach America

Posted: 18th May 2012 10:34

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 £85m) and;
2. at the option of the Sellers, up to 85 further coaches for a cash consideration of up to US$25.6m (approximately £16m).

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 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 Atlanta hub and that business is amongst those to be acquired.

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