FirstGroup has announced that it is freezing its interim dividend after a controversial pull out from the new West Coast mainline franchise.

The Aberdeen-based group said that it is holding a dividend of 7.62p after the UK government scrapped the award of the West Coast mainline franchise to the company. The transportations authorities in the UK have asked the Virgin to continue operating the country's west coast rail service till government sorts out the matter relating to the service.

"As a result of the uncertainty this creates, the board has decided to hold the interim dividend at last year's level, and will consider the appropriate level for the full-year dividend in May 2013," the company said.

The decision to ask the private company to continue operations comes as surprising development as the government has earlier awarded to a rival company. The new franchise deal was granted to Virgin's rival, FirstGroup instead of Virgin Trains. The government had to review its decision to grant the franchise to FirstGroup after it discovered flaws in the way the deal was awarded.

The Department for Transport (DfT) had recently said that it will no longer contest the Judicial Review about how the West Coast Main Line (WCML) franchise was awarded in August. Due to the legal challenge posed by Virgin Trains, First Group will not likely to receive keys to the line on 9 December.