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Return of Value Stagecoach

On 14 March 2007, Stagecoach Group plc ("Stagecoach" or the "Company") announced its intention, subject to Shareholder approval, to return value of 63 pence per Existing Ordinary Share, or approximately £700 million to Shareholders (the "Return of Value"). Based on the closing share price of Stagecoach Existing Ordinary Shares on 21 March 2007, the Return of Value is equivalent to approximately 36 per cent. of the Company's market capitalisation.

The announcement on 14 March 2007 included information on the background to the Return of Value, pension arrangements and an update on Stagecoach's current trading and prospects. This announcement provides further information on the proposed structure and timing of the Return of Value.

Under the Return of Value, Shareholders will receive 63 pence in cash in respect of each Existing Ordinary Share in issue at the Record Time (which is expected to be 5.30 p.m. on 11 May 2007) by a structure involving the issue to Shareholders of B Shares and/or C Shares and a proportional consolidation of the Company's Existing Ordinary Shares. This method of returning value to Shareholders has been chosen because it allows all Shareholders to be treated equally pro-rata to the size of their existing shareholdings in Stagecoach, and gives all Shareholders (with the exception of Overseas Shareholders) choices as to when, and in what form, they receive their proceeds from the Return of Value. In addition, it gives clarity as to the quantum and the financial effects of the Return of Value when compared to certain alternative methods of returning value.

A circular (the "Circular") will be sent to Shareholders shortly, which sets out details of the Return of Value and explains why the Directors of Stagecoach consider the Return of Value to be in the best interests of Stagecoach and Shareholders as a whole.

The Return of Value (together with certain other matters, including proposed amendments to the Articles of Association) requires the approval of Shareholders. These approvals will be sought at an extraordinary general meeting of Stagecoach, which is expected to be held at the Company's registered office at 10 Dunkeld Road, Perth, PH1 5TW at 12 noon on 27 April 2007. The Notice of the Extraordinary General Meeting will be set out in the Circular.

Shareholders should read the whole of the Circular and not just rely on the summarised information set out in this or earlier announcements. In particular, Shareholders should read Part 9 of the Circular which sets out a summary of the expected tax consequences for UK Shareholders in relation to the Return of Value and the Shareholder Alternatives.

A timetable of expected principal events is set out as Appendix 1 to this announcement. All dates in this announcement, including the appendix, are indicative at this stage. Shareholders should read the Circular for confirmation of these dates.

Terms of the Return of Value

  • Existing Ordinary Shares to be consolidated into New Ordinary Shares at a ratio of 9 New Ordinary Shares for every 14 Existing Ordinary Shares held at the Record Time (expected to be 5.30 p.m. on 11 May 2007)


  • Share consolidation ratio reflects the mid-market closing price of Stagecoach Existing Ordinary Shares on 21 March 2007


  • Shareholders can elect to receive the Return of Value in income or capital form by electing for Alternatives 1, 2 or 3 as set out in more detail in "Shareholders' Choices" below


  • Shareholders electing for Alternative 1 (Income Option) will receive a Single C Share Dividend on their C Shares of 63 pence each in cash (expected to be paid on 25 May 2007)


  • Shareholders electing for Alternative 2 (Immediate Capital Option) and receiving B Shares as part of their election will have their B Shares redeemed for 63 pence per share in cash (expected to be paid on 5 June 2007)


  • Shareholders electing for Alternative 3 (Deferred Capital Option) and receiving B Shares will receive a non-cumulative dividend equal to 70 per cent of 6 months' LIBOR, payable twice-yearly in arrears, until such B Shares are redeemed


  • Shareholders receiving C Shares under Alternatives 2 and/or 3 will be deemed to have elected to have their C Shares acquired by Credit Suisse Securities (Europe) Limited under the Purchase Offer expected to be made on 30 May 2007 with Shareholders expected to be paid the proceeds on 5 June 2007


  • Shareholders have the opportunity to elect for a combination of all three Alternatives



No application will be made to the UK Listing Authority or to the London Stock Exchange for any of the B Shares or C Shares to be admitted to the Official List or to trading on the London Stock Exchange's market for listed securities, nor will the B Shares nor C Shares be admitted to trading on any other recognised investment exchange. The B Shares and C Shares are transferable although, in the absence of a formal market, Shareholders' ability to sell the B Shares and C Shares is likely to be limited. The B Shares and C Shares will have limited rights.

Share Capital Consolidation
As part of the Return of Value, Existing Ordinary Shares will be replaced by New Ordinary Shares in order to reduce the number of Existing Ordinary Shares in issue to reflect the Return of Value. Every 14 Existing Ordinary Shares held at the Record Time will be consolidated into 9 New Ordinary Shares. Subject to normal market movements, the Share Capital Consolidation is intended to:

  • Make the share price directly comparable before and after the Return of Value;


  • Maintain the comparability of future earnings and dividend per share amounts with previously reported figures; and


  • Maintain the intrinsic value of awards that have been made under Stagecoach Share Schemes, such as the grant of share options to employees.


The New Ordinary Shares will have in all material respects the same rights as the Existing Ordinary Shares and are expected to be admitted to the Official List and to trading on the London Stock Exchange's market for listed securities at 8.00 a.m. on 14 May 2007.

Fractional entitlements to New Ordinary Shares will be rounded down to the nearest whole New Ordinary Share. Any fractional entitlements so arising will be aggregated and sold in the market. To the extent the fractional entitlements are less than £3.00 the proceeds will be retained by the Company. The Company estimates that all such fractional entitlements under the Return of Value will be less than £3.00.

Shareholders' choices
Shareholders will have the following choices:

Alternative 1 (Income Option) - expected to be paid on 25 May 2007
Shareholders who elect for Alternative 1 (Income Option) will receive one C Share for each Existing Ordinary Share they hold at the Record Time and on which they make a valid election.

Each C Share that Shareholders receive, because they have elected for Alternative 1 (Income Option), will entitle them to receive a single dividend of 63 pence (the "Single C Share Dividend"). This Single C Share Dividend is expected to be declared on 14 May 2007 and paid on 25 May 2007.

Shareholders who fail to make a valid election in respect of some or all of their Existing Ordinary Shares will receive C Shares in respect of whatever whole number of their Existing Ordinary Shares they failed to make an election. Shareholders who wish to receive the Single C Share Dividend in respect of all of their Share Entitlement need not complete the Form of Election. Overseas Shareholders will be deemed to have elected to receive the Single C Share Dividend in respect of all of their Share Entitlement.

Alternative 2 (Immediate Capital Option) - expected to be paid on 5 June 2007


Shareholders who elect for Alternative 2 (Immediate Capital Option) will receive one B Share (or possibly one C Share) for each Existing Ordinary Share they hold at the Record Time and on which they make a valid election.

Each B Share that Shareholders receive, because they have elected for Alternative 2 (Immediate Capital Option), will be redeemable and is expected to be redeemed at a price of 63 pence per B Share on 30 May 2007, with the proceeds expected to be paid to Shareholders on 5 June 2007.

If the number of B Shares in respect of which valid elections are received exceeds the maximum number of B Shares that can be issued (for a detailed explanation of the reasons why this may be the case, please refer to the Circular), elections for B Shares will be scaled back. However, even if elections for B Shares are scaled back, Shareholders electing for Alternative 2 will still be entitled to the Return of Value of 63 pence per Existing Ordinary Share and will receive some C Shares.

In relation to any C Shares that Shareholders may receive under Alternative 2 (Immediate Capital Option), these C Shares are not redeemable and are expected to be sold to Credit Suisse under the Purchase Offer, free of all dealing expenses and commissions, further details of which are set out in the Circular. The Purchase Offer is expected to result in Shareholders being paid on 5 June 2007, 63 pence per C Share purchased.

Alternative 3 (Deferred Capital Option)
Shareholders who elect for Alternative 3 (Deferred Capital Option) will receive one B Share (or possibly one C Share) for each Existing Ordinary Share they hold at the Record Time and on which they make a valid election.

Each B Share that Shareholders receive, because they have elected for Alternative 3 (Deferred Capital Option), will be redeemable twice a year with the first date on which Shareholders can have their B Shares redeemed being 30 November 2007. Shareholders holding B Shares issued under Alternative 3 (Deferred Capital Option) will also receive a continuing non-cumulative dividend on their B Shares of 70 per cent. of six months' LIBOR payable on the principal amount of 63 pence per B Share which will be payable twice a year in arrears until the B Shares are redeemed.

Stagecoach may redeem, at 63 pence per B Share, all of the B Shares remaining in issue at any time on or after 31 May 2012, or at any time (not before 31 May 2008) after the total number of B Shares remaining in issue becomes less than 20 per cent of the total number of B Shares issued.

If, as under Alternative 2 (Immediate Capital Option), the number of B Shares in respect of which valid elections are received exceeds the maximum number of B Shares that can be issued, elections for B Shares will be scaled back pro rata (as nearly as may be) to the number of B Shares which each Shareholder elects to receive, and the excess number of elections will instead result in Shareholders receiving C Shares. In relation to any C Shares that Shareholders may receive under Alternative 3 (Deferred Capital Option), these C Shares are not redeemable and are expected to be sold to Credit Suisse under the Purchase Offer, free of all dealing expenses and commissions. The Purchase Offer is expected to result in Shareholders being paid 63 pence per C Share purchased on 5 June 2007.

Shareholders should therefore note that some of the proceeds arising from an election for Alternative 3 (Deferred Capital Option) may not be deferred and would instead be paid on 5 June 2007. However, elections for Alternative 3 will be satisfied with B Shares in priority to elections for Alternative 2.

Shareholders should refer to the Circular for further information on the reasons for, and mechanism of, the scaling back exercise.


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