Stagecoach pulls back, but not in NZ

By CHRIS DANIELS

Stagecoach says its sale of its Hong Kong bus business is not a sign of a global retreat, because its New Zealand business is in good health and expansive mood. .

Scotland-based Stagecoach has sold Citybus, Hong Kong's second-largest bus company, to a rival transport business for £176 million ($507 million).

Ross Martin, executive chairman for Stagecoach Asia Pacific, said the company was very happy with its New Zealand business and the Hong Kong sale, coupled with a partial exit from North America, should not be viewed as a sign the company was bowing out of its international investments.

"We've invested heavily in New Zealand over the past decade, we've put $100 million into new vehicles for the New Zealand business," he said.

Patronage on some Auckland routes was up more than 20 per cent on last year.

"Every dollar of earnings in New Zealand we've poured back into New Zealand, we haven't paid a dividend offshore to Stagecoach yet. It's a bit of a success story for New Zealand and Stagecoach."

Martin said it was no secret that Stagecoach's investment in the United States had been a bad one, and assets were now being sold to restructure its balance sheet.

A good opportunity arose to sell the Hong Kong business for a good price, so it had been taken, he said.

"They looked at the country, the Sars problem, future potential for Hong Kong and decided this was the opportunity to get out at the right price."

Martin said Stagecoach had invested heavily in New Zealand, and was continuing to buy new buses as fast as it could get them.

Stagecoach chief executive Brian Souter said the Citybus offer represented good value in light of uncertainties over the economic climate in Hong Kong and the continuing capital needs of the business.



"The sale of Citybus will put the group in a strong financial position, further de-risks the group's portfolio and will allow management to focus on further developing our UK bus and rail businesses, a smaller and more robust portfolio in North America and our successful and growing New Zealand operations," he said.

Stagecoach paid $521 million for Citybus in 1999 and has since earned profits of about $230 million from it.

The sale will net Stagecoach $380 million in cash after deducting third-party debt.

Stagecoach says it is also interested in selling its other Asian interest, a 32 per cent stake in a China-based toll road operator, if it receives an acceptable offer.