Fitch: Stagecoach to negative

Fitch Ratings said it revised Stagecoach Group plc's and Stagecoach Transport Holdings plc's outlook to negative from stable and affirmed their long-term issuer default ratings and senior unsecured ratings at BBB and short-term issuer default ratings at F3.

The outlook revision follows Stagecoach's proposal to return about £340 million in cash to shareholders, Fitch said.

The proposal is due for shareholder approval, which is expected in October. Stagecoach intends to fund the return from a combination of surplus cash and existing committed bank facilities, Fitch said.

The agency said it expects Stagecoach's leverage to increase from 1.8x at the end of 2011 to 3x in 2012 as a result of the cash return. This is higher than the leverage level considered comfortable for the current ratings, Fitch said.

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