Stagecoach Holdings plcControlCoach USA, Inc., et al.

DEPARTMENT OF TRANSPORTATION

Surface Transportation Board

[STB Docket No. MC-F-20948]

Stagecoach Holdings plc--Control--Coach USA, Inc., et al.

AGENCY: Surface Transportation Board.

ACTION: Notice tentatively approving finance application.

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SUMMARY: Stagecoach Holdings plc (Stagecoach), a noncarrier that does

not control any U.S. carriers, filed an application under 49 U.S.C.

14303 to acquire control of Coach USA, Inc. (Coach), a noncarrier; its

7 noncarrier regional management subsidiaries (the management

companies); 1 and the 79 motor passenger subsidiaries (the

operating carriers) controlled by Coach through the management

companies. Persons wishing to oppose the application must follow the

rules under 49 CFR 1182.5 and 1182.8.2 The Board has

tentatively approved the transaction, and, if no opposing comments are

timely filed, this notice will be the final Board action.

\1\ The management companies are: Coach USA North Central, Inc.;

Coach USA Northeast, Inc.; Coach USA South Central, Inc.; Coach USA

Southeast, Inc.; Coach USA West, Inc.; Coach Canada, Inc.; and

Yellow Cab Service Corporation.

\2\ Revised procedures governing finance applications filed

under 49 U.S.C. 14303 were adopted in Revisions to Regulations

Governing Finance Applications Involving Motor Passenger Carriers,

STB Ex Parte No. 559 (STB served Sept. 1, 1998).

DATES: Comments must be filed by September 7, 1999. Applicants may file

a reply by September 20, 1999. If no comments are filed by September 7,

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1999, this notice is effective on that date.

ADDRESSES: Send an original and 10 copies of any comments referring to

STB Docket No. MC-F-20948 to: Surface Transportation Board, Office of

the Secretary, Case Control Unit, 1925 K Street, NW, Washington, DC

20423-0001. In addition, send one copy of comments to applicants'

representatives: William C. Sippel, Oppenheimer Wolff & Donnelly

(Illinois), Two Prudential Plaza, 45th Floor, 180 North Stetson Avenue,

Chicago, IL 60601-6710; and Betty Jo Christian, Steptoe & Johnson LLP,

1330 Connecticut Avenue, N.W., Washington, DC 20036.

FOR FURTHER INFORMATION CONTACT: Beryl Gordon, (202) 565-1600. [TDD for

the hearing impaired: (202) 565-1695.]

SUPPLEMENTARY INFORMATION: Stagecoach is a public limited company

organized under the laws of Scotland with no bus or other

transportation interests in the United States. With operations in eight

other countries, however, Stagecoach is one of the world's largest

providers of passenger transportation services.3 It had

annual revenues for the fiscal year ending April 30, 1999, of $2.475

billion.

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\3\ Stagecoach's principal business consists of divisions that

provide significant bus and rail passenger services in the United

Kingdom, and an overseas division that operates buses in

Scandinavia, Hong Kong, New Zealand, Portugal, Australia, and China.

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Coach is a Delaware corporation that controls the operating

carriers 4 through the management companies. Coach also

controls several non-federally regulated bus, van, and taxicab

companies.5

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\4\ Air Travel Transportation, Inc. (MC-166420); Airlines

Acquisition Co., Inc. (MC-223575); Airport Bus of Bakersfield (MC-

163191); Airport Limousine Service, Inc. (MC-315702); America

Charters, Ltd. (MC-153814); ASTI, Inc. (MC-252353); Americoach

Tours, Ltd. (MC-212649); Antelope Valley Bus, Inc. (MC-125057);

Arrow Line, Inc. (MC-1934); Arrow Stage Lines, Inc. (MC-29592);

Autocar Connaisseur, Inc. (MC-166643); Bayou City Coaches, Inc. (MC-

245246); Black Hawk-Central City Ace Express, Inc. (MC-273611); Blue

Bird Coach Lines, Inc. (MC-108531); Bonanza Bus Lines, Inc. (MC-

13028); Browder Tours, Inc. (MC-236290); Brunswick Transportation

Company d/b/a The Maine Line (MC-109495); Butler Motor Transit, Inc.

(MC-126876); California Charters, Inc. (MC-241211); Cape Transit

Corp. (MC-161678); Central Cab Company (MC-133058); Chenango Valley

Bus Lines, Inc. (MC-141324); Clinton Avenue Bus Company (MC-223062);

Colonial Coach Corp. (MC-39491); Community Coach, Inc. (MC-76022);

Community Transit Lines, Inc. (MC-145548); Desert Stage Lines, Inc.

(MC-140919); El Expreso, Inc. (MC-244195); Erie Coach Lines Company

(MC-127027); Gad-About Tours, Inc. (MC-198451); GL Bus Lines, Inc.

(MC-180074); Gray Line Air Shuttle, Inc. (MC-218255); Gray Line New

York Tours, Inc. (MC-180229); Gray Line Tours of Southern Nevada

(MC-127564); Grosvenor Bus Lines, Inc. (MC-157317); Gulf Coast

Transportation, Inc. (MC-201397); H.A.M.L. Corp. (MC-195792); Hudson

Transit Corporation (MC-133403); Hudson Transit Lines, Inc. (MC-

228); International Bus Services, Inc. (MC-155937); Kansas City

Executive Coach, Inc. (MC-203805); Keeshin Charter Services, Inc.

(MC-118044); Keeshin Transportation, LP (MC-263222); Kerrville Bus

Company, Inc. (MC-27530); K-T Contract Services, Inc. (MC-218583);

Leisure Time Tours, Inc. (MC-142011); Metro Cars, Inc. (MC-276823);

Mini Coach of Boston (MC-231090); Mountaineer Coach, Inc. (MC-

229627); Niagara Scenic Bus Lines, Inc. (MC-30787); Olympia Trails

Bus Co., Inc. (MC-138146); Orange, Newark, Elizabeth Bus, Inc. (MC-

206227); P&S Transportation, Inc. (MC-255382); Pawtuxet Valley Bus

Lines (MC-115432); PCSTC, Inc. (MC-184852); Pittsburgh

Transportation Charter Services, Inc. (MC-319195); Powder River

Transportation Services, Inc. (MC-161531); Progressive

Transportation Services, Inc. (MC-247074); Red & Tan Charter, Inc.

(MC-204842); Red & Tan Tours (MC-162174); Rockland Coaches, Inc.

(MC-29890); Ross Tours, Inc. (MC-175674); Salt Lake Coaches, Inc.

(MC-347528); Stardust Tours, Inc. d/b/a Gray Line Tours of Memphis

(MC-318341); Suburban Management Corp. (MC-264527); Suburban Trails,

Inc. (MC-149081); Suburban Transit Corp. (MC-115116); Syracuse and

Oswego Coach Lines, Inc. (MC-117805); Texas Bus Lines, Inc. (MC-

37640); Tippett Travel, Inc. d/b/a Marie's Charter Bus Lines (MC-

174043); Transportation Management Services, Inc. (MC-237433);

Trentway-Wagar, Inc. (MC-126430); Tucker Transportation Co., Inc.

(MC-223424); Utica-Rome Bus Co., Inc. (MC-7914); Valen

Transportation, Inc. (MC-212398); Van Nortwick Bros., Inc. (MC-

149025); Wisconsin Coach Lines, Inc. (MC-123432); Worthen Van

Service, Inc. (MC-142573); and 2948-7238 Quebec, Inc. d/b/a Visite

Touristique de Quebec (MC-302514).

\5\ The appropriate filing has been made under the Hart-Scott-

Rodino Antitrust Improvements Act of 1976, 15 U.S.C. 18a, with

respect to that portion of the transaction that involves

Stagecoach's control of non-federally regulated entities.

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Stagecoach has formed two wholly owned subsidiaries for the purpose

of

[[Page 39556]]

effectuating the proposed transaction: SCH Holdings Corp. (Holdings);

and SCH Acquisition Corp. (Acquisition), a wholly owned subsidiary of

Holdings. Both of these companies are Delaware corporations, with no

interest in any regulated carrier. Pursuant to an agreement among

Stagecoach, Holdings, Acquisition, and Coach, Holdings has undertaken a

cash tender offer for up to all of the outstanding shares of Coach.

Upon satisfaction of certain conditions and completion of the tender

offer, Acquisition will be merged with and into Coach, with Coach as

the surviving entity. Coach will then be merged with and into Holdings,

with Holdings as the surviving entity, and, upon completion of that

merger, the name of Holdings will be changed to Coach USA, Inc. If more

than 80% of the stock of Coach is tendered in response to the tender

offer, the first of these mergers may be unnecessary.6 After

completion of these mergers, Coach will be a subsidiary of

Stagecoach.7 The transaction will not result in any transfer

of operating authority held by any of the operating carriers or in any

change in the essential nature of the services provided by those

carriers. The management of Coach is expected to remain largely in

place, and Stagecoach does not currently plan to change the manner in

which Coach is operated.

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\6\ Applicants have indicated that the structure of the

transaction may be altered as future circumstances warrant. For

example, an additional holding company or U.S. limited partnership

may be placed in the corporate chain between Stagecoach and Coach.

Applicants have requested that the control authority granted herein

include any such intermediate entities. Applicants have represented

that any such change will not affect the material terms of the

transaction, and that they will inform the Board of any changes in

the present arrangement.

\7\ Pending Board action on this application, the stock will be

held in independent voting trusts.

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Applicants submit that granting the application will be consistent

with the public interest and will have no adverse effects on the

adequacy of transportation to the public, fixed charges, or the

interests of employees. Applicants also submit that the proposed

transaction will have no adverse effect on competition, because it will

not result in the consolidation of any currently independent motor

passenger carriers. On the contrary, applicants believe that the

transaction will significantly benefit the traveling public and

employees through efficiency savings and innovations that will result

from the combination of the financial and management resources of

Stagecoach and Coach. Specifically, it is anticipated that by providing

Coach access to Stagecoach's significant resources and global

transportation management expertise, the transaction will enable Coach

to expand its carrier acquisition program and to improve the level and

amount of services already offered to the operating carriers. Further,

it is anticipated that fixed charges may be reduced as a result of

Stagecoach's ability to refinance Coach's existing debt on more

favorable terms. Each of these benefits, applicants contend, will

translate into benefits for the traveling public in the form of

improved and more competitive bus services.

Applicants state that Coach and its subsidiaries will continue to

observe current collectively bargained agreements and that no layoffs

are anticipated as a consequence of the transaction.

Applicants certify that: (1) The aggregate gross operating revenues

from interstate operations of the operating companies exceeded $2

million during the 12-month period ending December 31, 1998; (2) none

of the operating carriers holds an unsatisfactory safety rating from

the U.S. Department of Transportation; (3) each has sufficient

liability insurance; (4) none of the parties is domiciled in Mexico nor

owned or controlled by persons of that country; and (5) approval of the

transaction will not significantly affect either the quality of the

human environment or the conservation of energy resources. Additional

information may be obtained from the applicants' representatives.

Under 49 U.S.C. 14303(b), we must approve and authorize a

transaction we find consistent with the public interest, taking into

consideration at least: (1) The effect of the transaction on the

adequacy of transportation to the public; (2) the total fixed charges

that result; and (3) the interest of affected carrier employees.

On the basis of the application, we find that the proposed

acquisition of control is consistent with the public interest and

should be authorized. If any opposing comments are timely filed, this

finding will be deemed to be vacated and, unless a final decision can

be made on the record as developed, a procedural schedule will be

adopted to reconsider the application.\8\ If no opposing comments are

filed by the expiration of the comment period, this decision will take

effect automatically and will be the final Board action.

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\8\ Under revised 49 CFR 1182.6(c), a procedural schedule will

not be issued if we are able to dispose of opposition to the

application on the basis of comments and the reply.

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Board decisions and notices are available on our website at

WWW.STB.DOT.GOV.''

This decision will not significantly affect either the quality of

the human environment or the conservation of energy resources.

It is ordered:

1. The proposed acquisition of control is approved and authorized,

subject to the filing of opposing comments.

2. If timely opposing comments are filed, the findings made in this

decision will be deemed as having been vacated.

3. This decision will be effective on September 7, 1999, unless

timely opposing comments are filed.

4. A copy of this notice will be served on: (1) The U.S. Department

of Justice, Antitrust Division, 10th Street & Pennsylvania Avenue, NW,

Washington, DC 20530; and (2) the US Department of Transportation,

Office of Motor Carriers-HIA 30, 400 Virginia Avenue, SW, Suite 600,

Washington, DC 20004.

Decided: July 15, 1999.

By the Board, Chairman Morgan, Vice Chairman Clyburn, and

Commissioner Burkes.

Vernon A. Williams,

Secretary.

[FR Doc. 99-18745 Filed 7-21-99; 8:45 am]

BILLING CODE 4915-00-P