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National Express wins vote for rights issue

In a turn up for the books, National Express has today confirmed that shareholders have voted through a £360 million rights issue even though the largest shareholder in the company, the Cosmen family, voted against the fundraising. So what does this mean for National Express?

The problem for National Express is that the company's balance sheet is literally stretched to the limit and unless the company raises significant funds in the short term it stands on the verge of breaching banking covenants and a potential multi-million pound penalty from its bankers. As a consequence, in reality the company needed to raise these funds as quickly as possible and was literally up against time and market conditions.

How ironic that the company has confirmed the £360 million rights issue at a time when worldwide money markets are again under pressure after the Dubai issue came to a head only 48 hours ago. Whether this will impact upon the cost of refinancing the remaining debt built up by National Express remains to be seen but it looks as though conditions in the money market could get very much worse before they improve.

A number of companies who were perhaps planning to "tap" investors for additional funding may now be wondering whether they have left it too late in the short term?

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