FirstGroup's £240m share placement

FIRSTGROUP moved to cut its debt levels in the wake of the credit crunch yesterday, placing shares worth almost £240 million with institutional investors.

Moir Lockhead, chief executive of Britain's largest transport group, said the placement was designed to "strengthen (the] capital structure".

At the end of March, Aberdeen-based FirstGroup had net debt of around £2.16 billion, an increase of £1.65bn on a the previous year, mainly as a result of the acquisition of US business Laidlaw International, owners of the iconic Greyhound coach business, last year

Lockhead said by paying down the debt the funds, would improve the group's flexibility to continue growth through acquisitions, in particular in the US.

The placement sent shares down by as much as 9 per cent yesterday morning, before recovering to close down 6.3 per cent on 561.5p.