Royal Mail IPO. Where does the money go?

[RedlorryMan]

When the Inital Public Offering of shares in Royal Mail is completed next week.where does the proceeds of the IPO go tois it.
1 To Royal Mail to give it money to invest into the company?
As Moya has often quoted We need acess to private capital to invest in the company to complete modernization.
And the ConDem polititions have talked about the need for Royal Mail to have access to Private Capital to invest. And that the Government can not lend that money to Royal Mail without taking it sway from schools and hospitals.

or it it

2 To the government to provide Value for Money for the Tax payer. And to help pay of the national dedebt.

Im confused

[RobertT]

It goes to the government.

[RedlorryMan]

by RobertT » Thu Oct 10, 2013 2:36 pm It goes to the government.

As I thought.

So how can Royal Mail access private capital then?

If the govt sell of more of there shares in future then that money will also go back to HMG.

[TrueBlueTerrier]

So how can Royal Mail access private capital then?

Financing
The main role of the stock market is to act as a barometer for financial health. Analysts are constantly scrutinizing companies and this information affects the companies' traded shares. Because of this, creditors tend to look favorably upon companies whose shares are performing strongly. This preferential treatment is in part due to the tie between a company's earnings and its share price. Over the long term, strong earnings are a good indication that the company will be able to meet debt requirements. As a result, the company will receive cheaper financing through a lower interest rate, which in turn increases the amount of value returned from a capital project.

Alternatively, favorable market performance is useful for a company seeking additional equity financing. If there is demand, a company can always sell more shares to the public to raise money. Essentially this is like printing money, and it isn't bad for the company as long as it doesn't dilute its existing share base too much, in which case issuing more shares can have horrible consequences for existing shareholders

If the govt sell of more of there shares in future then that money will also go back to HMG.

Yes, but there is nothing to stop RM selling more shares, though the value of the current ones will go down.

[mandelsons_toenail]

Where does the money go?

[rhino49]

If the company is now worth so much more - surely it should pay out retrospectively on Colleagueshares ?

[UnhappyGremlin]

The money goes to the Government who will use it to make some sort of tax cuts in preparation for bribing us for votes in the general election in May 2015.

[wandle]

If the company is now worth so much more - surely it should pay out retrospectively on Colleagueshares ?

The free shares we are getting in the flotation may not be the only free shares we get. The union has long been asking for a 'replacement for the ColleagueShares scheme', and there is a clue - hidden deep in the prospectus - on how Royal Mail could facilitate this, should the ongoing talks (and a bloody big YES vote) produce results.

from page 81 of the Prospectus:
A further award of Employee Free shares may also be made on or after 6 April 2014 on a similar basis, to Eligible Employees still in Company or RMG  employment

That date is significant. HM Revenue and Customs rules for Share Incentive Plans forbid awards of shares worth more than £3000 in any tax year. The 2014/15 tax year commences on 6 April 2014, so - if Royal Mail are serious about employees being rewarded for making the company more profitable - they could distribute some of the profit directly to us, by awarding a further set of Free Shares. I would expect, though, that any additional shares would then (also) have to be held for 5 years, if holders want to sell them without paying tax.

[stephen500]

by RobertT » Thu Oct 10, 2013 2:36 pm It goes to the government.

As I thought.

So how can Royal Mail access private capital then?

If the govt sell of more of there shares in future then that money will also go back to HMG.

http://uk.reuters.com/article/2013/09/1 ... BR20130911
"Britain's Royal Mail has secured 1.4 billion pounds ($2.21 billion) in debt facilities2
Royal Mail get nothing from the share sale, indeed they pay out about £28m in fees.
They also still owe the government nearly £900m for css machines.
So they now have to give out up to £200m per year as a dividend and service debt.
How about that for a government sleight of hand.