24/07/2003

Stagecoach Group plc is pleased to announce that it has agreed terms for the sale of the South East region of Coach USA to a newly formed affiliate of Lincolnshire Management, Inc., Echo Bridge LLC, and private investors, who have partnered with management to acquire these operations.

Completion of the transaction is subject to regulatory approval, final confirmation of financing and normal closing conditions.

The gross consideration for this latest sale is US$48 million, to be satisfied by cash of US$40 million and an interest-bearing loan note receivable of US$8 million repayable no later than 63 months from date of close.

Coach USA’s South East region has operations in Florida, Maryland, Georgia and North Carolina, running in excess of 500 vehicles and employing 620 people. A total of 8 businesses are included in the sale as well as the purchase of an additional 58 vehicles, representing US$5 million of the purchase price.

The consideration is broadly in line with the expected book value of the net assets at completion and, accordingly, the transaction will not result in a material gain or loss on disposal in the consolidated accounts of Stagecoach Group plc. The cash proceeds will initially be used to reduce the Group’s outstanding net debt. The disposal will not have a significant impact on the Group’s annual earnings per share.

The results of the South East region included in Stagecoach Group’s consolidated results for the year ended 30 April 2003 were turnover of US$49.8 million and an operating profit before goodwill amortisation of US$5.8 million.

Stagecoach Group announced in December 2002 a 12 to 18-month strategy to restructure Coach USA and identified a number of businesses that it intended to sell. The sale of the Transit, New England, South Central and West regions have already been announced, along with the disposal of some small taxi operations in Kansas City, Long Island and Indianapolis. Together with the sale of the South East region, the gross consideration for these businesses amounts to more than US$270million.

The Group intends to continue to pursue opportunities for the disposal of the Canadian region as well as its remaining taxi businesses. Consistent with this strategy, the Group will continue to reduce overheads in line with the business restructuring and sales programme.

Brian Souter, Stagecoach Group Chief Executive, said: “We are continuing to make excellent progress on the restructuring of Coach USA and this is a further milestone in the delivery of our North American strategy.

“We are now pressing ahead with the remaining elements of our disposal programme. I believe we are well on track to achieve our objective of a smaller, but nevertheless substantial and more robust US business focused on our successful operations in the North East and North Central regions.”

ENDS

Enquiries to:

Martin Griffiths, Group Finance Director, Stagecoach Group, 01738 642015
Steven Stewart, Corporate Communications, Stagecoach Group, 01738 442111 or 07764 774680
John Kiely, Smithfield Financial, 020 7360 4900

Note to Editors:

• Stagecoach Group is a leading international transportation company, with operations in the UK, the USA, and New Zealand.
• Lincolnshire Management, Inc is a New York based private equity fund manager and will acquire these assets for its $315 million Lincolnshire Equity Fund II. Since the company was founded in 1986, it has completed over 45 acquisitions.
• Echo Bridge LLC is based in New York and invests in middle market companies in North America, the UK and Europe.