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National Express receives a body blow to independence

Struggling transport group National Express today received a body blow to its hopes of remaining independent after the auditors Ernst & Young flagged concerns about the company's ability to continue as a going concern. This comes at a time when the group was forced to ditch one of its rail franchises, has seen debt balloon to nearly £1 billion and is currently being circled by an array of potential suitors looking to take over the group.

While the company itself does not believe that current banking covenants will be breached, there is growing concern about the mountain of debt and the company's inability to pay off this debt in the future. The company currently has a proposal from a potential suitor on the table and many analysts and investors were surprised that yesterday's results statement did not contain a more robust takeover defence. So have the management hoisted the white flag?

It would be wrong to suggest that the management of National Express have given up, as they are currently assessing the overall situation (including today's auditors statement), but there is great concern amongst investors about the company's future. We should hear something fairly soon regarding the future of the group as the directors will be as keen as anybody to avoid speculation and heightened concern.

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