By Myles Neligan and Paul Sandle
LONDON (Reuters UK) - A top shareholder of National Express Group (NEX) accused the bus operator of lack of strategy after it rebuffed a merger proposal from rival Stagecoach Group (SGC).
Debt-laden National Express walked away from a tie-up with Stagecoach on Thursday because it feared a deal could not be done by Christmas, when it faces 5 million pounds in penalty interest payments on its near 1 billion pound debt pile.
Spain's Cosmen family, which holds 19 percent of National Express, said on Friday the company had failed to carry out a full assessment of its strategic options, in particular the merger proposal from Stagecoach.
Shares in National Express were 2.6 percent higher at 329.3 pence by 2:52 p.m..
"At the very least, the Cosmens' issues need to be addressed," Andrew Fitchie, an analyst at Collins Stewart said in a note.
National Express said it had explored a number of potential solutions and believed raising cash via a rights issue to meet the debt payment remained the best option for all shareholders.
"They (the Cosmens) are entitled to their view, but the board must take all shareholders into account, not just one," a spokesman said.
Another shareholder, however, said it shared the Cosmens' concern that the company was too hasty in rebuffing Stagecoach.
TOUGH CHALLENGE
"They are reluctant to do the rights issue process along with due diligence for the sale," the shareholder, who did not want to be named, told Reuters Loan Pricing Corporation.
"They are saying they can't do it from a business/managerial perspective, that they don't have the time or ability ... National Express is foolish -- I feel that they are using the Takeover Code rules against me as a shareholder."
Analysts said National Express faced a tough challenge getting away an equity financing of around 300 million pounds to 400 million when its market capitalisation was only 482 million.
"We can't understand why the National Express board dismissed the Stagecoach proposal; it would have made sense to run a dual-track process," Fitchie said.
The Cosmen family and private equity group CVC Capital Partners approached National Express in September with a 765 million offer worth 500 pence a share, but walked away on October 16 after examining the company's books.
A successful deal would have involved the Cosmens regaining Spanish bus business Alsa, which was sold to National Express in 2005, while Stagecoach was eying the group's British rail and bus operations.
After deciding not to go ahead with the bid, the family threw its conditional support behind the equity fundraising plan.
The shareholder said the company had little choice but to press ahead with the fundraising. "Unless I can miraculously corral three shareholders against management of the company, I don't think there's anything we can do," the shareholder said.
"The Cosmens can shout and scream, but unless we go to the board and say that 25 percent of shareholders disagree we will not be successful."
(Additional reporting by Tessa Walsh; Editing By Tiisetso Motsoeneng and David Holmes)
