Nat Express rights issue agreed

The loss of the franchise comes after National Express was forced to hand back the East Coast main line service having run up large losses on the route.

National Express, which once ran half of Britain's rail network, is expected to increasingly focus on its coach operations.

The bus and rail operator said it would issue around 357 million shares at 105 pence per share -- a 70 percent discount to Thursday's closing price of 336.70 pence -- on a seven-for-three basis, fully underwritten by Merrill Lynch and Morgan Stanley.

The fundraising will allow National Express's lenders to push back the maturity date of its 540 million euro debt facility from September 2010 to March 2011, allowing it to refinance its other 800 million pound credit facility.

Analysts said the Cosmens recent stake-building was designed to show the board it was committed to a long-term role in the business and that they would likely take up the option to buy rather than see its stake diluted to around 6 percent.

The Cosmen family and private equity group CVC Capital Partners approached National Express in September with a 765 million offer worth 500 pence a share, but walked away on October 16 after examining the company's books.

($1=.6105 Pound)

(Editing by James Davey and Karen Foster)