Stagecoach waives covenants, loses franchise fight

Perth-based Stagecoach Group plc said on Thursday it has agreed a covenant waiver with its lending banks.

This followed news that Stagecoach lost a court battle with its claims against the UK Secretary of State for Transport regarding decisions to disqualify the group from three rail franchise competitions.

“Stagecoach Group plc continue continues to take appropriate action to maximise financial flexibility as it negotiates the continuing challenges and uncertainty around COVID-19 and the UK’s recovery,” said the Perth firm.

“We have taken the precautionary measure of agreeing a covenant waiver for the periods ending 31 October 2020 and 1 May 2021 with our group of lending banks for our facilities expiring March 2025.

“As an alternative to the covenants, we have agreed minimum liquidity thresholds at 31 October 2020 and 1 May 2021.

“Combined with the other actions outlined in our announcements on 23 March, 3 April and 28 May, the group has strong liquidity, with available cash and undrawn, committed bank facilities of over £800m.”

On the court ruling, Stagecoach said on Wednesday: “Stagecoach Group plc notes the decision of the High Court today in respect of its claims against the Secretary of State for Transport regarding decisions to disqualify the Group from three rail franchise competitions.

“The Court ruled against the group’s claims.

“We believe there were important issues which needed to be determined by the court to help secure the future of the country’s rail system and our view remains that we were right not to accept the risks in these contracts.

“Nevertheless, while we are disappointed at today’s ruling, we accept the decision and move on.

“The country is facing a huge challenge in fighting the Covid-19 pandemic, and all of our energies are focused on ensuring our transport networks help the national effort at this critical time.”