Cabinet approves sale of Maltapost shares to Lombard Bank

The Cabinet yesterday approved the implementation of the second of three stages in the privatisation of Maltapost, which is the transfer of 25 per cent of the Government’s shareholding to Redbox Ltd, a wholly-owned subsidiary of Lombard Bank plc. As a result of this transfer Lombard Bank plc will effectively become the majority shareholder in Maltapost plc with 60 pct of the shares.

Government said the agreed price for the shares was Lm 1,217,585 (EUR2,836,210). This represented a 50 per cent premium over the net asset value of the shares based on the last audited accounts of the company. Based on the average profits of Maltapost in the past three years, the price represents a price to earnings ratio of 68. So, apart from believing that this step was strategically important for the company, Government also believes that the agreed price is an advantageous one.

The Cabinet also approved the proposal by Investment, Industry and IT Minister Austin Gatt that Maltapost plc should be fully privatized.

Government shall, in the coming months, initiate the process for selling the remaining 40 per cent of its shares via an Initial Public Offering on the Malta Stock Exchange.

Government believes it should not operate in commercial areas which are best left to the private sector.

Postal services in the EU are already partly liberalized and due for complete liberalisation in a few years time. The market is regulated by the Malta Communications Authority which is responsible for ensuring that postal services are provided against regulated rates.

At present, the market for postal items exceeding 50 grams is completely liberalized and open to competition and there is no reason for the Government to continue operating in this business in competition with the private sector. The Government added that the EU was also drafting regulations intended to liberalize the postal market by 2009. The operational presence of the Government is therefore no longer justified.

The Government, through the Malta Communications Authority, will retain the duty and the right to ensure that Universal Postal Obligations are satisfied and completely safeguarded by Maltapost plc in the interest of customers.

In this context, Government said, it would shortly be signing an agreement with Lombard Bank Malta plc which would also oblige the latter:

• to facilitate the Government’s decision to sell its shares on the Stock Exchange;

• To ensure that Maltapost plc remains the national postal operator and continues to serve its Universal Postal Obligations providing a service of the highest standard;

• Not to transfer shares in Redbox Limited during the coming five years;

• That until such time as the Government sells all its shares, Government retains the right to block any changes in the Memorandum and Articles of Association of Maltapost plc.

During the past days the Ministry for Investment, Industry and IT held talks with the postal employees’ union, Union Haddiema Maghqudin, to explain the privatisation process.

During these meetings, Government explained what it had done to ensure that privatisation was of benefit to the employees of Maltapost plc. The ministry explained that it had agreed with Lombard Bank plc that present employees of Maltapost plc will have guaranteed jobs until retirement or resignation, (except in disciplinary cases as provided by law), and that there was an agreement for Maltapost plc not to declare redundancies among existing employees.

Maltapost employees who were employed by the Posts Department prior to 1995 have the choice of returning to Government employment according to a 1996 agreement on employees affected by privatisation.

This is considered another important development in the Government’s privatization program which during the past four years has maintained a steady pace securing tangible benefits for the economy.

Government believes that a privatized Maltapost plc will be in a much stronger position to compete in a market that is vital for Malta’s economy. The new majority shareholder – Lombard Bank Malta plc is an established institution with a long history in Malta and today has international shareholding and quoted on the Malta Stock Exchange.

In the time that it was a minority shareholder of the company, Lombard Bank plc proved its commitment to Malta, the Maltese commercial community as well as to its own employees.

The Government said this augurs very well for the future of Maltapost plc, to the service that its clients can expect as well as to the employees at Maltapost.