Burges Salmon advises FirstGroup

The projects are part of FirstGroup's strategy to achieve net-zero status by 2050 and decarbonize its bus fleet by 2035. The initiative, carried out in partnership with Hitachi through the joint venture NextGen, aims to replace diesel buses with electric ones, reducing CO2 emissions by around 56,000 tonnes annually. Burges Salmon's advice covered various aspects, including corporate, projects, and finance, facilitating the transition toward sustainable and environmentally friendly transport infrastructure.

Law firm Burges Salmon has played a pivotal role in advising FirstGroup plc on two interlinked projects, totaling around £200 million, focused on the deployment of up to 1,000 electric buses. These initiatives are integral to FirstGroup's broader objective of achieving a net-zero business by 2050 and ensuring the decarbonization of its bus fleet by 2035. The projects involve the removal of up to 1,000 diesel buses, replaced by new electric buses, leading to an estimated annual reduction of approximately 56,000 tonnes of CO2 emissions.

In November 2023, FirstGroup entered into a 50-50 joint venture with Hitachi named NextGen. The joint venture focuses on the acquisition, deployment, and management of batteries for electric buses. The equity investment and debt funding for the venture involve collaboration with MUFG, SMBC, and Natwest. Burges Salmon provided comprehensive legal advice to FirstGroup, covering corporate, projects, and finance aspects of the transaction.

The legal firm assisted in various stages of the projects, including the partnership with Hitachi, the creation of NextGen, the acquisition and leasing of batteries, and the funding of residual electric bus bodies. The latter transaction, structured as a syndicated hire-purchase funding arrangement with Lloyds, NatWest, and Bank of America, amounted to up to £150 million and qualified as a green loan under the Loan Market Association's Green Loan Principles.

Burges Salmon's role demanded a deep understanding of the complex commercial arrangements associated with the buses, ensuring seamless integration and interoperation with NextGen documentation. The legal team led by Rupert Weston, Lucy Pegler, Rachael Ruane, and Alistair Rattray facilitated the funding arrangements while addressing the diverse interests and requirements of funders.

Christy Baker, General Counsel at FirstGroup, expressed gratitude to the Burges Salmon team for their support and acknowledged their impressive understanding of the transport and energy sectors. The legal counsel's commitment to supporting clients in their transition to sustainable practices aligns with the broader industry goals of achieving a net-zero future and promoting the decarbonization of critical infrastructure.

Burges Salmon's Sustainable Transport team, renowned for its expertise across various transport sectors, worked collaboratively on this initiative, reflecting the firm's commitment to advancing sustainable and environmentally conscious practices in the transport industry. The legal firm was honored with The Legal Award at the 2023 Self-driving Industry Awards, further highlighting its leadership in the evolving landscape of transport technologies.