RM suitor still sought despite withdrawal of Deutsch Post

[TrueBlueTerrier]

Royal Mail suitor still sought despite withdrawal of Deutsche Post

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Ministers remain in talks with TNT, the Dutch company, and CVC, the private equity firm, to take a stake in Royal Mail

Ministers will press on with their search for a private partner for the Royal Mail despite one of the leading bidders pulling out and fears among MPs that the Conservatives are laying a trap for Gordon Brown.

The Times was told that after Deutsche Post, the Germany logistics company, withdrew from the race, the Business Department remained in talks with TNT, the Dutch company, and CVC, the private equity firm.

One insider suggested that Deutsche Post might yet come back into the frame once it was certain that the legislation, threatened by a massive Labour revolt, had got through.

But senior Labour MPs, who have warned Mr Brown that as things stand he will only get the Bill through with Conservative support, are questioning whether they should be forced to vote on the equity sale if no deal is done with an outside bidder looking for a 30 per cent stake.

They believe that the withdrawal of Deutsche Post could turn out to be a lifeline for Mr Brown, who will otherwise be at the mercy of the Tories. They fear that despite repeated avowals of support the Conservative leadership will find a way of detaching themselves during the Bill’s detailed report stage, leaving Mr Brown high and dry.

Labour business managers will attempt to push through the legislation before the summer recess to avoid it hanging over the party as it enters its pre-election conference in September.

But they, too, believe Mr Brown’s path would be eased if the Government could find an alternative to the equity sale as a means of transforming the Royal Mail business. They also believe that any key amendments to the Bill should be made in the Lords this month so that it reaches the Commons in the form the Government believes it can push through.

Some senior MPs say the Government’s motives remain unclear. One said: “Are they going for this sale because they need the money? That’s fair enough. Or is because they feel that without some new managers in we won’t get the modernisation we want. We have our doubts. We don’t think there is much wrong with the present management.”

Senior MPs said that they would find it hard to understand why they were being asked “ensure pain” and vote for the part-privatisation of Royal Mail if there was no realistic chances of the private sector coming in.

Lord Mandelson, the Business Secretary, has already admitted that it will not be easy to find an outside partner. Pat McFaddem, the postal services minister, has said that the strong opposition of Labour MPs and the unions have made the climate for the talks difficult.

Government insiders said there was an obvious attraction for some in using the absence of bidders as an excuse for avoiding the potentially critical vote, but added that the situation could not be left as it was. If the Government was to take on the pension fund liabilities it had to be certain of “transformative” changes inside the business taking place.

[F0zziebear]

It seems that TNT and Deutschepost have such serious concerns in their own domestic markets that they will not be able to afford the cash to put through this deal. This in theory only leaves CVC at the moment. Their only attempt will be to leverage the company in turns of generating cash by reducing costs and being seen to raise revenues. They will then sell on the company in a supposedly better position.

This my friends is the worst possible outcome for yourselves as they owuld not be as interested in your welfare as say a TNT or DP. If you think times under Leighton and Crozier are bad then these guys will be worse.

Can you do anything about it? Labour are so desperate for money that they would sell their own grandmother at the moment. They created reports such as the Hooper one to justify their needs and look what they tried to pull on the 3rd runway at Heathrow. SImply put I wouldn't trust them in this situation. They are in a corner and desperate.

Talks on this will run and run. I cannot see in the current climate anyone wanting to buy into RM when volumes are falling and their main previous growth areas, namely baking and public sector in such dire straites. This is a potential election loser and not popular with the public. I suspect this sell-off will fall into a ditch with an election coming up early next year.

We'll see what happens

F0zz running from trap 3

[DGP1]

I've serious doubt that CVC could raise the money in the current money markets (unless they sell off some of their businesses) the only way I could see them getting the money is if the Government guaranteed them money no matter what happens.

As for the Government needing money they're going to take the £26 billion that is in our pension fund to help with the balance sheet.