Nat Express rights issue agreed

National Express said more than two-thirds of shareholders voted in favour of a cash call at an extraordinary meeting on Friday, a move which will allow it to repay some of its 1 billion pound debt pile and avoid breaching loan terms.

Jorge Cosmen, National Express' deputy chairman, raised his family's stake in the company from 18.5 percent to almost 20 percent earlier this week in what analysts said was a last-ditch attempt to vote down the cash call on Friday.

The Cosmens, which dropped their own proposal to buy National Express in September, have been campaigning against the fundraising on the grounds that it was too large. They have accused the company of lacking a strategy after it rebuffed last month's takeover proposal from Stagecoach .

National Express rejected Stagecoach's all-share offer because it feared a deal would not be executed by Christmas, when it faces 5 million pounds in penalty interest payments on its near 1 billion pound debt pile.

Shares in National Express, which have fallen 16 percent in the last three months month, were 1.25 percent down at 332.60 pence by 12:15 p.m., valuing the group at around 515 million pounds.

"You would assume the bulk of the votes against the rights issue came from the Cosmens and the question is what will they do next?," said Arbuthnot analyst Gerald Khoo.

"The rights issue cash will help get the group's debt down but it faces several other challenges going ahead, such as refinancing its debt, finding a new Chief Executive and dealing with trading problems."

RAIL FRANCHISE LOSSES

The government on Thursday ordered National Express to hand back its East Anglia rail franchise in March 2011.