Pounds 2,500 in shares for UK post workers

THE 200,000 workers at Royal Mail will each receive one share worth up to Pounds 2,500 if the government-owned body is part-privatised.

Allan Leighton, Royal Mail’s chairman, is pressing the Department of Trade and Industry to support a plan to give 20% of the group’s shares to staff. This stake would be worth Pounds 400m-Pounds 500m and put an effective value on Royal Mail of almost Pounds 2.5billion.

The share sale is part of a complex Pounds 2billion fundraising that Leighton is pursuing. The proceeds will be used to reduce the size of the group’s huge pension deficit, which has swollen to Pounds 4.2billion, and to fund investment – particularly for automated equipment.

Royal Mail has retained Morgan Stanley, the investment bank, to advise on the fundraising, and a document will be sent to the government in the next six weeks.

The outlook for the group has been helped by the decision of Postcomm, the postal regulator, to allow a 2p rise for a first-class stamp from April. The price of a second-class stamp will rise by 1p to 22p.

Although Royal Mail described the rises as “tough”, it does enable it to defend itself against external competition.

Royal Mail hopes that once its finances are put on to a firmer footing the group will ultimately be worth a lot more and the value of each share that will be granted to workers could double to Pounds 5,000.

The government has yet to decide whether it will back the fundraising and it is in the process of picking an investment bank to advise on the matter.