Rotala completes Preston Bus deal
The long-running ownership saga at Preston Bus appears to have come to an end today after Birmingham-based bus operator Rotala confirmed it has reached a deal worth more than £3m to buy the company.
AIM-listed Rotala will pay coach giant Stagecoach £3.2m for the business, which employs about 240 staff in Preston. The deal ends more than 12 months’ speculation about the company’s future after the Competition Commission ordered Stagecoach to sell it in November 2009.
The offer for Preston Bus was made on a debt free basis and the board of Rotala estimates that the net book value of the assets being acquired is approximately £3m, with the principal operating assets being comprised of a freehold property and the vehicle fleet. Preston Bus operates a fleet of 85 vehicles.
“This acquisition represents an exciting new phase in the development of the Rotala group,” said Rotala chairman John Gunn. “The extension of our network up the M6 to Preston will bring us a presence in a wholly new area of operation where the development potential is considerable.
“I am confident that this acquisition will much enlarge the activities of the company and deliver further increases in shareholder value in due course.”
In the year to 30 April 2010, Preston Bus reported a turnover of £7.75m and the loss before tax was £132,000. The company expects to generate revenues of £9.5m in the current financial year after hitting sales of £5.6m in the seven months to 30 November 2010.
The acquisition is being financed by a hire purchase facility, secured on the vehicles owned by Preston Bus, a bridging loan from the group's bankers of £617,500 and the remainder from the existing banking facilities of the group. The bridging loan is repayable in two tranches, one of £460,000 by 28 February 2011 and one of £157,500 by 28 May 2011.
Preston Bus’ services are largely operated on a commercial basis, but it also carries out a number of tendered services, including school contracts. It runs about 10 million passenger journeys a year.
