An activist investor in bus and rail operator FirstGroup has claimed its board is “destructive” as it seeks to shake up the company’s management team.
Coast Capital Management LP, which owns 9.77% of the FTSE-250 company, has called for a shareholder meeting to remove six of the current eleven directors and appoint seven of its own candidates to the board.
The New York-based hedge fund has also claimed that the London-listed company’s recently-appointed chief executive Matthew Gregory was “extraordinarily under-qualified” with “no surface transport experience”.
James Rasteh, Coast Capital’s chief investment officer, told Sky’s Ian King Live that value in the company had been “eroded” for many years in a row.
He said: “We don’t think that the board, which has seen over an episode of great under-performance against its peers can get credit for the overall industry being a good one to be in.
“We’re looking to improve operations and cash flow for all stakeholders, including pensioners.
“We’re looking to get rid of an extraordinarily under-qualified and destructive board.”
Mr Rasteh has suggested that during a hostile takeover attempt of the company in early 2018, FirstGroup’s board appointed Mr Gregory as its chief executive after other qualified candidates withdrew their application.
He added: “It seems to us as, after all the relevant and qualified CEO candidates withdrew their nominations, the company basically appointed Matthew Gregory.
“He has no surface transport experience at all and was previously with a bingo hall operator and a chemical company and is extraordinarily under-qualified for the position that he’s assumed.”
Coast Capital has put forward a plan involving former transport minister Steven Norris to turn around the company.
The hedge fund will need more than 50% of shareholders to back its plan to succeed in taking over the boardroom.
FirstGroup responded by saying its management was “focused on delivering shareholder value” and that it had the “right team with the right experience” in place.
It added: “The company’s engagement with Coast Capital has included detailed responses to several proposals and has involved a number of meetings with the chairman and with senior management.”
Shares in the company closed more than 1% lower on Monday at 115.20p. It is expected to report its full year results to the market on 30 May.