Stagecoach negotiates sale of U.S. operations

Stagecoach has confirmed that it is negotiating to sell off the New England bus operations of its Coach USA division to Peter Pan Bus Lines in Springfield, Mass. The sale, pending approval from the Surface Transportation Board, is expected to go through without any difficulty, a Stagecoach spokesman said. A trading statement issued by Stagecoach in April did not offer any new information on the restructuring in the U.S., but it confirmed that Coach USA lacked a significant improvement in the second half of 2002, with revenue down 3.2%. The company’s strategy to restructure Coach USA remains on schedule, according to a statement. A key to the restructuring plan includes reducing Stagecoach’s exposure to the U.S. leisure market. Stagecoach has sold several small businesses in the U.S., but the spokesman said the sale of the New England properties would be the first major sale since the restructuring was announced. The Perth, Australia-based conglomerate chose to divest itself of its U.S. tour and charter holdings after a review of Coach USA, which has performed poorly for the past two years. Stagecoach, which acquired Coach USA in 1999 for $1.9 billion, now values it at more than $600 million. In December 2002, Peter Pan Bus Lines signed a purchase and sales agreement with Coach USA. This action signaled the company’s first step in acquiring five New England affiliates in Coach USA’s stable — Arrow Lines, Bonanza Lines, The Maine Line, Pawtuxet Valley Lines and Coach USA Boston. Cumulatively, these operations, which represent about 5% of Coach USA’s revenues, earned $51 million. The sale will include all of the five companies’ 255 buses and bring Peter Pan’s fleet to more than 400 coaches. “This acquisition allows Peter Pan to enlarge our footprint in New England and virtually doubles the size of our company by adding complementary elements to our core business,” said Peter Pan President Peter Picknelly. Peter Pan transports 3.5 million passengers every year and has annual gross sales of more than $60 million.