Stagecoach Group plc sold its Hong Kong Citybus operations for $292 million to Chow Tai Fook Enterprises, a family firm that operates rival Hong Kong bus company New World First Bus.
The net cash proceeds from the sale will total $153 million after third-party debt, which will be used toward Stagecoach’s debt, totaling $764 million in December 2002.
Despite the outbreak of Severe Acute Respiratory Syndrome (SARS) earlier in the year, the proposed disposal was based on a long-term view of the profitability and capital requirements of the business and not the immediate trading conditions, according to a statement.
“The offer for the sale of Citybus represents good value for the business in light of the uncertainties over the economic climate in Hong Kong and the ongoing capital requirements of the Citybus business,” said Brian Souter, Stagecoach chief executive.
Continuing with its sales plan, Stagecoach also divested itself of its Coach USA operations in south central and western regions of the U.S. for $155 million.
Coach USA’s western operation locations included California, Colorado, Nevada, Arizona, Wyoming and North Dakota, running 1,153 vehicles and employing 2,200 people.
The south central locations included Texas, Tennessee, Arkansas and Louisiana, running some 400 vehicles and employing more than 800 people. A total of 18 operations were sold.