England’s Stagecoach Group has agreed to buy nine Coach America businesses out of bankruptcy protection for $134 million to increase its Megabus network. According to Bloomberg.com, the businesses bought are centered in New York, Chicago, Philadelphia, Pittsburgh and Washington to California, Florida and Texas. Last year the same Coach America units had a profit of $13.3 million last year from sales of $164.4 million. Stagecoach Group’s CEO is Brian Souter.
Coach America Holdings Inc. filed for Chapter 11 bankruptcy in early January in the U.S. Bankruptcy Court for the District of Delaware. As of late November the company, with its more than 3,000-vehicle fleet, had $402 million in debts and some $274 million in assets.
Megabus.com is the first, low-cost, express bus service to offer city-to-city travel for as low as $1 via the Internet. Since launching in April 2006, megabus.com has served more than 15 million passengers throughout more than 70 major cities in the Midwest and Northeast of the USA and Canada.
In late November 2006, Fenway Partners, a middle market private equity firm, entered into an agreement to acquire Coach America, then the largest tour and charter bus operator and the second largest motorcoach services provider in the U.S., from Kohlberg & Company. The New York firm acquired Coach America for $60 million. The company was generating $393 million in revenues at that time. Fenway became the company’s largest shareholder when it invested in Coach America back in 2006.
Red flags around the company’s financial situation appeared in February 2011 when Coach America’s lenders, along with Fenway Partners, amended and restated the company’s senior secured credit facility new investment and debt-to-equity conversion together totaled close to $50 million.