Outcome of Judicial Review Hearing

RNS Number : 2323E

Rotala PLC

09 March 2022

 

RNS

9 March 2022

Rotala Plc

("Rotala", the "Company" or the "Group")

Outcome of Judicial Review Hearing re Greater Manchester

On 26 March 2021, the Company announced that on 25 March 2021 the Mayor of Greater Manchester had made the formal decision to franchise the bus market in the Greater Manchester region. The Company made an immediate claim to the High Court of Manchester to judicially review the process by which the consultation was continued by Greater Manchester Combined Authority ('GMCA') in light of the COVID-19 pandemic, and the decision of the Mayor to franchise the bus network.

The outcome of this claim has been handed down by Mr Justice Julian Knowles today. Throughout the Company's court claim, the Board has remained confident that both these decisions were irrational and/or unlawful. Therefore, although of course fully respecting the court's decision, nevertheless it is extremely disappointing to announce that Mr Justice Julian Knowles has dismissed the claim. The Board still believes these decisions to be irrational and/or unlawful and  is in the process of applying for permission to appeal the decision to the Court of Appeal.

As an operator in Greater Manchester, the Company has acted to attempt to protect its business from a decision that is not only detrimental to Rotala's future prospects, but also potentially detrimental to the citizens of Greater Manchester in imposing upon them the financial burden of a franchising scheme that the Board believes has not been properly assessed in line with the relevant legislation.

The Company remains committed to providing a high level of service to bus users in Greater Manchester and remains willing to enter into a statutory partnership with Transport for Greater Manchester and the other bus operators in Greater Manchester. The Board is still of the view that the partnership approach would not only be just as effective as a franchising scheme, and be done at less risk to the public purse, but also could be implemented far more quickly than the full franchising scheme.

However, should the Company be unsuccessful in its legal case and the franchising scheme is implemented, it will potentially be required to sell its Bolton depot and the bus assets based there to GMCA. The Board believes that the Bolton depot has first class facilities and is the most modern and up-to-date bus depot operating in Greater Manchester. The bus fleet based there is also the most modern of any of the large operators in that region. The Board is therefore confident that the values which might potentially be realised from the sale of these assets under the mechanisms which the GMCA has already announced will at a minimum realise their book values and be more than sufficient to pay off the mortgage on the Bolton depot and the hire purchase debt associated with the bus assets based there. As a result, any sale of this nature would have no negative effect on the Group's balance sheet and its leverage would fall to very low levels. In this scenario, the capital which the Group currently has invested in its Bolton operation would be realised into cash and be available for re-investment or redeployment elsewhere in the Group.  

A further announcement will be made in due course.

Rotala Plc	0121 322 2222
John Gunn, Chairman Simon Dunn, Chief Executive Kim Taylor, Group Finance Director
Shore Capital	020 7408 4090
Tom Griffiths / James Thomas / Michael McGloin (Corporate Advisory) Henry Willcocks (Corporate Broking)

About the business  

Rotala provides a range of transport solutions, ranging from local bus services under contract to local authorities, through to commercial bus routes. Rotala has operations at Heathrow Airport, in the West Midlands and in the North West. Operating companies are Diamond Bus Ltd, Diamond Bus (North West) Ltd, Hallmark Connections Ltd and Preston Bus Ltd.

 

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