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How bus company almost went bust

THE SHROUD of secrecy that surrounded the sale of Eastbourne Buses has finally been lifted.

Councillors and officials came under fire for discussing the troubled finances of the company behind closed doors and refusing to reveal what was in the confidential papers.

People were angry because Eastbourne Borough Council owned 80 per cent of the company and any financial shortcomings would have had a knock-on effect on council tax payers.

The sale of the beleaguered bus firm went through last week and the council received just over 3.7 million from national bus operator Stagecoach.

After the deal was finalised councillors lifted the lid on the negotiations which have been taking place behind the scenes.

And Troy Tester, deputy leader of Eastbourne Borough Council, revealed Eastbourne Buses would not have survived in to the New Year.

"No one wanted to sell Eastbourne Buses but it became the only way to guarantee future bus services in the town," said Councillor Tester.

"The prospect of local people waking up one day to find there were no buses running was becoming a real possibility.

"It was unlikely the company could have survived until Christmas without the support of a national bus operator."

It was also revealed this week that Eastbourne Buses came within hours of having to close back in April 2007 when the company couldn't afford to pay for fuel.

It was only saved at the eleventh hour by an unsecured personal loan of 150,000 from an executive director.

Cllr Tester added, "The Conservative-led council failed to support Eastbourne Buses at any way during that awful time.

"When the Liberal Democrats took control of the Town Hall following May 2007's local elections, the new administration supported the bus company in its bid for increased borrowing.

"This enabled it to repay the 150,000 loan and continue trading. The operating loss for the past financial year was less than in the final two years of Conservative control of the council but Eastbourne Buses just could not continue to trade at a loss."

Two companies were in the running to buy Eastbourne Buses. The first bid was from Stagecoach for 4.05million and the second bid came from Go-Ahead for 2.85million.

Cllr Tester said as a result, there was no close competition between the bidders.

"With a 1.2million difference in the bids, the council would have been doing a disservice to local taxpayers had it not gone with the Stagecoach offer.

"Stagecoach also guaranteed job and salary security for the operational staff at Eastbourne buses for a period of two years.

"In addition, they have also promised a fleet of at least 12 new buses, to enter service in January 2009.

"Unfortunately, no such guarantees were offered by the other bidder. In fact, the lower bid would have failed to even cover the large pension liability of the company."

"If the council had chosen to accept the lower bid there would have been serious consequences.

"The sale would have been unlikely to have been signed off by the Secretary of State. Also, the council's own auditors would have challenged the decision and other legal challenges could have followed.

"Worse still, all of the objections would have involved significant costs to the local council tax payer and caused significant delays in any transfer happening.

"Any delay could have seen the company placed into receivership with the loss of bus services and jobs before Christmas.

"The council would also have been responsible for all of the company's debts. The minority shareholder company, Keolis, which owned 20 per cent of the company, had also indicated that it was unwilling to agree to a sale in which it would receive nothing for its investment, which would have happened if the lower bid had been accepted.

"Both Keolis and Eastbourne Borough Council needed the agreement of each other to sell their shares and neither bidder was willing to buy less than 100 per cent of the company."

Leader of the Conservatives on Eastbourne Borough Council David Elkin said, "With the sale of Eastbourne Buses virtually complete and the detail now beginning to emerge, the main priority must be the future continuity of both quality bus services for Eastbourne and secure employment for all the staff concerned.

"It is unfortunate that this sale has become somewhat of a political football, however I would just like to re-affirm that all through the process the Conservative group's over-riding concern was to protect the assets for the long term benefit of residents.

"This to a degree seems to have been achieved. Unfortunately there is still a major issue around how the pension gap will be funded.

"As and when this is dealt with, we will be insisting on the route that puts Eastbourne residents at least risk as the 3.7 million receipt falls well short of the predicted pension deficit of 4.4 million."

Stagecoach this week announced it would be investing 1.5 million in new greener buses for the town as part of what it called 'its plans to ensure local people have access to a comprehensive, high quality and affordable bus network'.

The national bus operator also said that while there would be some changes to management and administration roles as part of the acquisition, it had given a commitment that there would be no compulsory redundancies amongst driving and engineering staff.

Les Warneford, managing director of Stagecoach UK Bus, said, "We are delighted to have signed a contract to purchase Eastbourne Buses and bring significant new investment to local bus services.

"We already have plans to invest 1.5 million in new state-of-the-art vehicles with some of the greenest engines in Europe and we are committed to ensuring that local people have access to a sustainable, comprehensive, high-quality and affordable bus network.

"Eastbourne Buses will enhance our position as a major employer and bus operator in the region.

"While there will inevitably be some changes to the business, we will be looking to build on the strengths of the operation and look forward to working with staff to attract more people to the benefits of greener, smarter bus travel."

 
 
 

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