FirstGroup in $85m earnout as EQT sells First Transit

Aberdeen-based bus and rail giant FirstGroup plc announced it will be entitled to an earnout consideration of around $85 million as EQT Infrastructure has agreed to sell First Transit to Transdev North America, Inc.

In May 2021, FirstGroup shareholders approved the sale of its North American businesses First Student and First Transit to Stockholm-based investment firm EQT Infrastructure.

FirstGroup said in a stock exchange statement on Wednesday: “In accordance with the terms of the disposal of First Transit by FirstGroup plc to EQT Infrastructure V in July 2021, the group has been notified that affiliates of EQT Infrastructure have signed an agreement to sell First Transit to Transdev North America, Inc.

“The sale by EQT is subject to customary conditions, including regulatory and antitrust clearance processes in the US and Canada.

“As part of the First Transit disposal to EQT Infrastructure, FirstGroup is entitled to an earnout consideration, which is calculated as a percentage of the realised equity value on the sale by EQT and contemplating the cash flows generated by First Transit since March 2021 to completion (subject to certain permitted leakage provisions).

“FirstGroup currently estimates the earnout consideration to be around $85m.

“Based on this estimate, FirstGroup is expected to record a non-cash loss of c.£30m relative to the carrying value of the earnout of £106m as at 26 March 2022.

“The final earnout consideration amount will be determined in the period following completion of the Sale by EQT, with receipt expected several months after completion.”

FirstGroup CEO Graham Sutherland said: “Receipt of the First Transit earnout proceeds will be another milestone in the transformation that FirstGroup has undertaken in recent years to refocus on our strong positions in UK bus and rail.

“The earnout proceeds will further strengthen our business, which is now a resilient and robust platform with a range of opportunities for growth and shareholder value creation.”