National Express releases profits warning
Troubled transport group National Express has today issued a profits warning and confirmed that profits will be slightly below analyst forecasts and the cost of financing the company's debt has increased over the last few months. The company confirmed that trading "remained difficult" in the three months to September and the takeover approach by CVC Capital Partners created a delay in refinancing the company which added one percentage point to the cost of the company's debt.
While the company is rumoured to have had an approach from Stagecoach regarding a possible merger of the two companies it plans to push ahead with a fundraising over the next few weeks which will require the support of major shareholders. It is rumoured the company is looking for around £350 million to strengthen its balance sheet with National Express bankers concerned about the level of debt.
The directors also confirmed that they are looking at other ways of streamlining the operation and reducing the company's cost base in the short to medium term. Whether or not a merger with Stagecoach is agreed, or in fact allowed by the authorities, remains to be seen but many people believe this would be the best course of action for both parties involved.
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