Stagecoach sells Preston Bus for £3m
BUS giant Stagecoach has announced that it has sold the Preston Bus company to Midlands operator Rotala for £3m in cash.
Stagecoach bought the business in January 2009 for £7m following an intense period of competition between the pair when Stagecoach ran lossmaking services in the town.
However, following its purchase the Competition Commission argued that the deal had “substantially” reduced competition in the town and ordered a sale of the business in 2009, which was to include a bus depot and a number of routes.
Birmingham-based Rotala said that it was acquiring 85 vehicles operating “predominantly local” routes carrying around 10m passengers per year as part of the deal.
It is also taking on around 200 employees and a depot at Deepdale Road two months north of Preston city centre. It is also acquiring a number of tendered services for schools contracts.
In the year to April 30, 2010, Preston Bus Ltd declared a pre-tax loss of £132,000 on sales of £7.75m. In the following seven-month period to November 30, turnover was £5.6m.
Rotala is paying for the deal via an asset-based loan of £2.4m secured on Preston Bus Ltd’s vehicles and a bridging loan of £617,500. However, it plans a placing of almost 1.65m shares – or 5% of the existing share capital, to raise £461,000 in order to pay off the first tranche of the bridging loan.
Rotala’s chairman John Gunn said: “This acquisition represents an exciting new phase in the development of the Rotala group.
“The extension of our network up the M6 to Preston will bring us a presence in a wholly new area of operation where the development potential is considerable.
