Rights-issue puzzle at National Express

11 April 2012

Shareholders at today's National Express annual meeting were left none the wiser as to whether the train and coach group will be passing round the begging bowl.

Analysts believe the company needs to raise up to £400 million in a rights issue to reduce its £1.2 billion debts and keep the business within covenant agreements with its lending banks.

Ahead of today's annual meeting, chief executive Richard Bowker told the Evening Standard: "There is no current intention to raise money via a rights issue, though we are keeping all our options open."

However, insiders insist National Express's bosses are saying there are no plans for a rights issue yet — but that the group could well go to investors later this year.

The group's finances are under pressure because of its ambitious 2007 contract to run the East Coast railway out of King's Cross.

Revenue growth has collapsed to 0.3% from 9% and profit margins have slumped as passengers trade down from first to standard class and pre-book tickets.

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