Ministers Hire Banks To Lead Royal Mail Sell-Off

[TrueBlueTerrier]

http://news.sky.com/story/1096847/minis ... l-sell-off" onclick="window.open(this.href);return false;

Barclays and Goldman Sachs among banks landing roles on the biggest privatisation for decades, Sky News understands.

City bankers will receive a fraction of their usual fees in exchange for landing the mandate to work on the £2.5bn flotation of Royal Mail, Britain's biggest privatisation for a generation.

Sky News understands that ministers will announce on Wednesday the appointment of several members of a syndicate of investment banks to prepare the listing of the state-owned postal operator, which could take place as soon as the autumn of this year.

Among the banks that have been appointed on the potential initial public offering (IPO) are Goldman Sachs and UBS, which will lead the deal according to senior City sources.

Barclays and Bank of America Merrill Lynch will take more junior roles on the deal.

The appointments were being finalised amid secrecy in Whitehall, with Government officials attempting to negotiate wafer-thin fees with the banks as late as Tuesday evening, people close to the situation said. One insider said that the fees were likely to amount to roughly 1pc of the proceeds raised, with ministers targeting a share sale to raise hundreds of millions of pounds.

The banks' remuneration is expected to be tied closely to the success of a flotation, they added.

The appointment of the banking syndicate is one of the final elements that was required to be put in place before ministers formally fire the starting-gun on a flotation.

Last week, Royal Mail appointed a registrar to oversee the creation of an employee share scheme following a pledge that 10% of the company's shares will be handed to staff, potentially involving a windfall of more than £1000 for every employee.

Sky News revealed last month that Whitehall officials were debating whether employees of Royal Mail subsidiaries in France and Germany would be included in the share handout.

Postal workers are likely to be forced to hold onto their shares for some time in the event of a stock market listing. A period in which selling would be restricted would, ministers hope, prevent an immediate slump in Royal Mail’s share price.

The Department for Business, Innovation and Skills and Royal Mail both declined to comment.

[TrueBlueTerrier]

Press release:

Royal Mail – investor’s gains are consumer’s losses

http://saveourroyalmail.org/2013/05/pre ... rs-losses/" onclick="window.open(this.href);return false;


Commenting on reports that Royal Mail is looking to raise a syndicated bank credit facility of £1.5bn ahead of privatisation, Save Our Royal Mail campaign director Mario Dunn said:

“It is ridiculous for Ministers to argue that Royal Mail has to be privatised in order for it to be able to raise capital in this way.

“Royal Mail can raise a cheaper credit line facility in the public sector and not have to pass the costs onto customers. Satisfying both banks and investor’s needs will come at a heavy price to users.”



The government aims to raise around £2bn for the sale of Royal Mail but this will be virtually wiped out overnight by the credit facility the business is seeking. Dunn said:

“Royal Mail is seeking to flex its muscles to prove it can meet investor’s needs. Yet what investor’s gain, consumers lose through higher prices and reduced services in rural areas.

“Ministers have yet to explain exactly why Royal Mail cannot enjoy access to private capital in the public sector, other than some vague suggestion that it will mean reduced investment elsewhere.

“It cannot be beyond the wit and wisdom of Treasury Ministers to devise a method to ensure Royal Mail lending is ring fenced. If the banks are willing to lend it £1.5bn it must be because they know they will get a return on it. Royal Mail can look after itself financially.”

[UnhappyGremlin]

They only want to borrow £1.5bn? That's about 18 months worth of profit. That's legitimate profit by the way, not the doctored version that was just announced.