FirstGroup cuts debt by sale of freight arm

FIRSTGROUP sold its rail freight business to Channel Tunnel operator Eurotunnel for £31 million yesterday to help cut its debt mountain, writes Martin Flanagan.

GB Railfreight is the second major British freight player to change hands in recent years after Deutsche Bahn bought rival EWS in 2007.

Sir Moir Lockhead, chief executive of Aberdeen-based FirstGroup, said: "The net proceeds of the disposal will be used to further reduce the group's net debt and are in addition to the group's stated target of net cash generation of 150m in the current financial year."

At First's full-year results last month, the group revealed that its debts came down last year to 2.3 billion from 2.5bn. The company has owned GB Railfreight since 2003.

Jacques Gounon, Eurotunnel's chief executive, said: "The size of the French and British freight markets together accounts for about 75 per cent of that of the leader, Germany."

Eurotunnel said GB Railfreight, which employs 300, would complement its existing Europorte business in France.