UK to consider repaying Consignia dividends
Britain said on Tuesday it would consider giving back nearly 250 million pounds ($357 million) in cash to loss-making former postal monopoly Consignia [GBPO.UL] to help ensure it survives increasing competition.
The state-owned mail service wants the money, which it paid out to the government as dividends, to help fund a huge cost-cutting drive.
The mail service plans to cut up to 15,000 jobs over three years in a first round of restructuring as it faces the possible loss of its 250-year monopoly by 2006.
A Department of Trade and Industry spokesman said state- owned Consignia had asked the government to repay the dividends paid in the financial years 1999/2000 and 2000/01, worth 151 million and 93 million pounds respectively.
Secretary of State for Trade and Industry Patricia Hewitt had said that she will consider such a request, the spokesman told Reuters.
He said Hewitt would view it in the light of Consignia’s strategic plan and balance sheet restructuring proposals, which the mail service will present to the department in the next month. The dividends are currently invested in gilts – UK government securities.
Hewitt announced in Parliament on Monday that the government would forego the dividend for the current financial year, which would be worth 64 million pounds.
Consignia has been paying dividends to the government despite losing millions of pounds over the last few years.
The first jobs to go at Consignia, formerly the Post Office, will be at its parcels, transport and support operations.
The firm has already signalled that up to 30,000 jobs could eventually go from its 200,000-strong workforce in what could be the largest programme of job losses in recent UK history.
The company is currently losing 1.5 million pounds a day and wants to cut annual costs by 1.2 billion pounds as it faces off with rivals like Hays , Business Post Group and Dutch group TPG NV .
A Consignia spokeswoman told Reuters on Monday the group could not yet calculate the cost of the restructuring, but one newspaper reported Consignia would set aside as much as 400 million pounds to pay for redundancies.
Hewitt also told Parliament on Monday that Consignia might apply to the postal regulator to increase the price of postage. The regulator did not rule out the possibility of allowing a price rise.
