The Cosmen family has increased its stake in National Express to almost 20 per cent and has not ruled out raising it further as its members look to strengthen their hand ahead of the transport company’s vote on a £360 million rights issue.

In another aggressive move ahead of an extraordinary general meeting scheduled for Friday, the Cosmens, who are the largest shareholders in National Express, added another 750,000 shares at a price of 359.96p each, taking their holding to just short of 19.5 per cent.

The latest purchase follows the family’s addition of 500,000 shares at 341p last Friday. Last week’s move cost the family just under £2 million.

News of the second investment pushed the National Express share price as high as 380p, but it fell back to close 4¾p lower at 362p.

The family, represented on the board by Jorge Cosmen, the deputy chairman, have opposed plans to raise £360 million with a seven-for-three rights issue to reduce the company’s £1.1 billion debt and avoid a large fine for missing repayments due at the end of the year.

The share purchases suggest that the Cosmen family is committed to its investment in the British business, despite the high-profile campaign to vote down the board’s plans to raise funds.

The moves also suggest that, despite opposing the rights issue, the Cosmens have the estimated £70 million that would be required to maintain their stake in National Express if the rights issue goes ahead.

However, National Express needs only 50 per cent of the vote to proceed with the rights issue, meaning that the Cosmens face an uphill struggle to block the fundraising.

A National Express spokesman said that the company remained “confident” that the majority of shareholders would back the board. He added that, in its conversations with its largest shareholders, the company had not encountered any other opposition to the rights issue.

One large shareholder that has supported the company throughout the recent turbulence is M&G Investment Management, which has a 12.6 per cent stake. Other investors have yet to reveal their cards.

Fears that the fate of the company could lie with short-selling hedge funds have diminished after Data Explorers, which compiles share data, said that only about 10 per cent of the company’s stock was out on loan as of last Friday.

The extraordinary general meeting will be held at 11am on Friday in London.

Douglas McNeill, an analyst with Astaire, a brokerage, said: “It is hard to believe that the National Express board would have launched the rights issue without being pretty certain that it had the EGM votes it would need.”

He said that the Cosmens’ move to increase its stake was “a puzzling development”. It was too small to achieve the family’s stated aim of blocking the rights issue or to avoid its stake being diluted below the 8 per cent level after the rights issue, which would cost Mr Cosmen his seat on the board.

The two sides have been at loggerheads since National Express, led by John Devaney, the chairman, chose to walk away from merger talks last month with Stagecoach, its rival, to pursue the fundraising plan.

The Cosmens have argued that the board should have a welldefined strategy before embarking on a rights issue.

National Express has had a rollercoaster six months after it decided to hand control of its loss-making East Coast Main Line rail franchise back to the Government, which subsequently threatened to strip the company of its other rail licences.

The company has not had a chief executive since Richard Bowker quit in the summer. A search to find his replacement has restarted only recently. A group of shareholders is understood to have approached Phil White, who ran the business for a decade, about returning to the job.

Going places

40,000 National Express employees worldwide

1992 floats on London Stock Exchange

362p share price down 1.3 per cent at the close yesterday

19.46% Cosmen family stake in National Express Source: National Express, Times research

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