New setback for National Express as Cosmens attack rights issue plans

National Express's biggest shareholder yesterday reacted angrily to the terms of a rescue rights issue, which the company hopes will put to bed worries about its £1bn debt pile.

The troubled transport company, which will surrender management of the East Coast mainline to the Government on Friday, announced that it is looking to raise £360m through a fully underwritten cash call. Shareholders have been offered seven new shares for every three already held, at 105p a share. The offer represents an almost 70 per cent discount to last night's closing price of 330.9p.

However, Spain's Cosmen family, which owns 19 per cent of the group and had earlier backed a friendly takeover approach from National Express's rival Stagecoach, said the offer "was not in the best interests" of the company. The family is understood to be specifically concerned about the size of the rights issue, considering £360m to be too hefty. "The family will therefore need to consider whether, in these circumstances, it can support a rights issue without any broader strategy to deal with the many challenges the company faces," it said yesterday.

The family had previously indicated that it would support the rights issue, but only "within certain parameters", and that was before it threw its weight behind the Stagecoach bid.

A source close to National Express insisted that that the rights issue was key to the company's future and its completion would see the company achieve its two objectives for the year: to breathe life into its battered balance sheet, meeting debt covenant tests of 3.5 times net debt to Ebitda, and jettisoning the East Coast mainline franchise.

The company has also had no chief executive since July, when Richard Bowker resigned to move abroad.