THE financial plight of Thamesdown Transport was so serious that the council was urged to sell the company by March or risk it collapsing, according to information which has now come to light.
On Wednesday evening, senior Swindon borough ouncillors met behind closed doors to approve an offer from the Go Ahead group worth £7.2m.
The sale of Thamesdown Transport’s Barnfield Road depot was also approved with a separate price tag of £4m.
The deal with Go South Coast, which operates a number of south coast bus and coach companies, was officially signed yesterday.
The decision to sell the council-owned bus firm was taken amid concerns about its future financial viability.
Poor performance figures have been publicised before but now the Adver can reveal just how serious the problems were at Thamesdown.
Negotiations over the future of the company have been shrouded in secrecy, staff have been threatened with dismissal and the council has conducted their business behind a confidentiality shield.
Thamesdown bosses and council officers were concerned that should the scale of the financial woes become public prior to a deal being completed, rival firms might move in in a hostile manner.
The company was on track to record a loss of £149,000 at the end of the current financial year — this would have taken its combined losses over the past five years to almost £2m.
An annual management fee that Thamesdown was supposed to pay the council was waived in 2013/14 and no payments have been made since.
With the future looking similarly bleak and with no clear path to profit, the council sought expert advice last year on what to do next.
They were urged to sell the company, to do so as soon as possible, and certainly before the end of March.
Accordingly, bids were sought from established bus operators around the UK and of those that came forward, Go Ahead’s was the most attractive.
The Adver understands that the initial offer was in the region of £8.5m.
But due diligence visits later uncovered staff shortages in the engineering and cleaning departments, issues with cleanliness, faults with equipment and mechanical problems with vehicles that all pushed the value down to the £7.2m agreed by the cabinet on Wednesday.
That figure was expected to fall slightly further still prior to the signing of the deal depending on the final position of the company.
But while the council may be getting in the region of £7m initially, by the time financial obligations and pension requirements left behind by Thamesdown are accounted for, only about half of that, between £3m and £4m, will remain.
The separate £4m from the Barnfield Road depot sale is expected to be reinvested as part of the council’s commercial investment strategy.
As part of the deal, the council has sought assurances that Go Ahead will not sell the depot within the first five years.
Existing routes are expected to continue as advertised, services funded by the council will carry on in accordance with the local bus strategy agreed last year.
Swindon Borough Council said today that councillors agreed to sell the council’s shares in Thamesdown and to sell the bus company to Go South Coast at Wednesday night’s Cabinet meeting to "ensure Thamesdown Transport has a sustainable future".
A spokesman said: "The bus company has incurred losses over the past five years due to difficult trading conditions, despite continued financial support from the council.
"And with the council also facing challenging financial pressures of its own, a review of the bus company concluded that the sale of Thamesdown Transport to an established operator would be in the best interest of council taxpayers, Thamesdown’s staff and its customers.
"Following a competitive process Go South Coast’s bid was assessed as offering the best value to the Council, which wholly owns the company.
"The offer from Go South Coast, the terms of which are commercially confidential, was for all the cuncil’s shares and the freehold of Thamesdown’s Barnfield depot."
Coun David Renard, leader of Swindon Borough Council, said: “We were one of the few local authorities in the country to still own a local bus company, but the council is operating in a really challenging financial climate at the moment and we do not have the resources to continue to support Thamesdown Transport as we have been doing in recent years.
“We have had to change the way we provide services across the council while balancing the ever increasing demand on adults’ and children’s services.
“We believe this deal is in the best interests of local bus users as it secures the financial sustainability of the bus company, offers the best long-term security for Thamesdown Transport’s employees, and will provide vital investment.
"Go South Coast’s expertise will also ensure customers continue to benefit from a high quality bus service.
“The council will arrange a joint meeting with Go South Coast and bus user groups in the coming weeks so customers have the opportunity to learn about future investment plans and raise any issues or concerns that they may have.”
Go South Coast managing director Andrew Wickham said today: “This is an excellent opportunity for us to develop the services on offer to local people here in Swindon and north Wiltshire.
“We’re keen to point out that it’s business as usual as far as our customers are concerned. Any tickets or passes they have will still be valid, and our 85 buses will continue to serve existing routes with no change to timings.
“That said, our ultimate aim is to enhance the services on offer here. As part of this, we will be consulting with local people and listening to the needs of those who travel on our buses.
"Our team will be engaging with representatives of local bus users about our plans to invest in local services.
“We are excited to be providing vital sustainable transport in this region, and I have no doubt our talented team will make a complete success of our new venture.
“I look forward to meeting with our local customers and hearing their views over the coming weeks and months."
The firm has appointed Alex Chutter, currently operations manager at sister company Salisbury Reds, to take the reins at Thamesdown as general manager.
For more information about Thamesdown, visit thamesdown-transport.co.uk