Tag: Royal Mail

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 – 500m and put an effective value on Royal Mail of almost Pounds 2.5 billion. The share sale is part of a complex Pounds 2 billion 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 4.2 billion, 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.

CSFB, the US investment bank, has emerged as frontrunner to advise the Department of Trade and Industry over a financial restructuring of the cash-strapped Royal Mail. Executives at the postal group are planning to lodge their proposals for a pounds 2 billion rights issue with the bank before Christmas.
Although a rights issue is not the only option being proposed to resolve the postal group’s funding problems, “it is the blindingly obvious first choice,” a source said. Under the restructuring, the Government would take an increased stake in Royal Mail in return for providing more funds, with 20pc of the shares allocated to employees. The organisation hopes to have a deal in place by the end of February, when the new regulatory settlement is due to begin.

Businesses including print firms, publishers and marketing agencies are to be targeted by the Royal Mail in a bid to communicate its Pricing in Proportion (PiP) plans. The change in the Royal Mail’s pricing structure comes into effect next August and the mailings are to be sent out this month. The information packs will provide sizing and pricing information, as well as advice on managing the impact of PiP. “We’ve listened to our customers and worked with them to accommodate the issues some of them have raised,” said Lorna Clarkson, director of commercial policy and pricing at Royal Mail.