(Bloomberg) - Summary by Bloomberg AI | Mobico 08 Aug 25
Summary by Bloomberg AI
Lenders to Mobico Group are looking to sell a chunk of a revolving credit facility at a discount, a sign of mounting concern over the firm’s ability to manage its debt load.
A spokesperson for Mobico said the company’s “overarching priority remains to strengthen its balance sheet and reduce debt,” and that “further options to improve debt and leverage remain under active consideration.”
Wolfgang Felix, founder of credit research firm Sarria, said Mobico has strong asset coverage and “its Spanish division alone would pay off the company’s debt,” and he doesn’t think the RCF will be drawn to pay down bonds coming due.
By Constantine Courcoulas and Edward Clark
(Bloomberg) -- Lenders to Mobico Group, the UK mass transit firm previously known as National Express Group, are looking to sell a chunk of a revolving credit facility at a discount, a sign of mounting concern over the firm’s ability to manage its debt load.
A £57 million ($76 million) slice of the security is coming up for auction next week in the mid 80s, according to two people familiar with the matter who spoke on condition of anonymity. The size of Mobico’s outstanding revolving credit facility, or RCF, is £600 million, with the vast majority of that coming due in 2029 after it was extended last year, according to the firm’s annual report. Mobico hasn’t drawn on the facility.
There has been at least one other sale of Mobico’s RCF, another chunk trading in July, people familiar with the matter said.
RCFs, which act as a kind of corporate overdraft facility, are considered to be among the safest parts of the capital structure and lenders typically hold them through to maturity, so sales can be seen as harbingers of distress.
The Birmingham-headquartered firm operates buses in markets including the UK, Spain and US as well as trains in Germany. While its WeDriveU operations in the US and ALSA in Spain have held up, its UK and German businesses have struggled recently and raised questions over its outlook.
A disposal of a US unit earlier this year spurred rating downgrades, with Moody’s Ratings cutting Mobico in June by three notches to B2. It said the proceeds from its sale of its North American School Bus (NASB) operation were lower than they had forecast, and that the company will reduce its debt load at a slower pace than previously expected.
Fitch downgraded Mobico’s rating to BB+, also citing the company’s weaker business profile after the sale of NASB. It expects the company to register negative free cash flow in 2025 and 2026.
‘Further Options’
A spokesperson for Mobico said the company’s “overarching priority remains to strengthen its balance sheet and reduce debt,” and that the recent sale of the NASB business was an important first step in that process. Mobico has no significant debt maturities until the second half of 2027, which the School Bus proceeds are sufficient to cover, the spokesperson added.
“Further options to improve debt and leverage remain under active consideration,” they said.
The company in 2024 reported £3.41 billion of revenue and adjusted earnings before interest, taxes, depreciation and amortization of £426.2 million, its annual results show. It registered a statutory operating loss of £519.9 million.
While the firm’s net leverage remains high after the US school bus sale, Mobico has strong asset coverage and “its Spanish division alone would pay off the company’s debt,” Wolfgang Felix, founder of credit research firm Sarria, told investors on a call Wednesday.
Regarding the RCF, Felix said he doesn’t think it will be drawn to pay down bonds coming due, because “that just makes no sense this early in the game.”
The firm has a €500 million ($584 million) senior unsecured bond coming due in September 2031 and a £250 million senior unsecured note that matures in November 2028. Both securities were indicated in the 80s on Thursday, according to data compiled by Bloomberg.
Mobico also has £500 million of perpetual bonds — a hybrid instrument that is junior and subordinated in the capital structure. The security is callable between November 2025 and February 2026. It was indicated at around 63 pence on Thursday, according to data compiled by Bloomberg.(Adds details on RCF in second paragraph, analyst comment in 11th and 12th garagraphs.)--With assistance from Giulia Morpurgo.
To contact the reporters on this story:
Constantine Courcoulas in London at ccourcoulas1@bloomberg.net;
Edward Clark in London at eclark138@bloomberg.net
To contact the editors responsible for this story:
Bruce Douglas at bdouglas24@bloomberg.net