Tag: Royal Mail

The Government is poised to hand 20 per cent of Royal Mail to its workforce by giving each of the organisation’s 195,000 employees pounds 5,000 worth of free shares. The move follows the announcement yesterday of a pounds 3bn bail-out of Royal Mail to resolve its pension crisis, modernise the letters business and fund the loss-making network of rural post offices. The employee shares will be controlled by a special trust so no outside investors can buy a stake in Royal Mail. Employees will be able to trade the shares between themselves and will receive an annual dividend but they are not expected to be allowed to keep them if they leave the company. Details of the scheme, which Royal Mail’s chairman, Allan Leighton, regards as central to his recovery plan for the business, are still being worked on but are due to be finalised in the next three to six weeks.

The government today confirmed a 1.75 bln stg financing package for the Royal Mail as the UK’s main postal service unveiled a 17.5 pct increase in annual profits. The government package, structured as a 900 mln stg loan on commercial terms to be paid back by 2013 plus an 850 mln stg draw on the Royal Mail Reserve to help plug an estimated 5.6 bln stg deficit in the organisation’s pension scheme. Aside from the pension deficit, the package is aimed at funding modernisation of Royal Mail’s infrastructure to enable it to cope with the UK postal market being opened up to greater competition. ‘Giving Royal Mail the freedom to use its financial resources to invest for the future puts the company in a stronger position to successfully compete in the marketplace and also deliver a financial return for the taxpayer,’ said Trade and Industry Secretary Alistair Darling.