Burges Salmon has advised FirstGroup on two connected projects relating to the investment and deployment of 1000 electric buses at a £200m cost.
The transactions are part of FirstGroup’s ambitions of becoming a net-zero business by 2050 and decarbonising its bus fleet by 2035.
It will see up to 1,000 diesel buses being removed from its fleet and replaced with new electric buses, saving up to c.56,000 tonnes of CO2 a year.
In November 2023, FirstGroup partnered with Hitachi in a 50-50 joint venture called NextGen focussing on the acquisition, deployment and management of the batteries to be used within the EV buses.
The joint venture, involve the purchase of up to 1,000 EV batteries and onward leasing to FirstGroup’s operating bus division, with Hitachi providing battery and charging management services, including smart charging software and on-site zero carbon power generation.
Burges Salmon advised FirstGroup on all aspects of the transaction across corporate, projects and finance teams. It has now also advised FirstGroup on the funding of the residual electric bus bodies, powered by the batteries leased via the NextGen arrangements.
The transaction, structured as an up to £150million syndicated hire-purchase funding arrangement with Lloyds, NatWest and Bank of America and documented as a green loan (adopting the LMA’s “Green Loan Principles”), centres on the acquisition and operation of the buses (after the sale and leaseback of the batteries to and from NextGen).
Rupert Weston said: “Combining sector expertise and cross-disciplinary capabilities, we’re committed to supporting our clients on their transition to a sustainable future and it has been a pleasure working with FirstGroup on this innovative and progressive partnership. This is a great example of the transport and technology sectors working as a collective to drive the Net Zero agenda and support the decarbonisation of vital infrastructure.”
Christy Baker, General Counsel at FirstGroup, said: “As leaders in sustainable mobility, we are keen to work with suppliers, partners, and stakeholders as we work towards our goal of a zero emission bus fleet by 2035. This innovative and progressive partnership with Hitachi exemplifies that we are eager to explore and create greener solutions for the future. We’re grateful to the team at Burges Salmon for their support; their understanding of the transport and energy sectors is impressive and their advice always commercial and on-point.”
Image of Rupert Weston courtesy of Burges Salmon