Pay back the Royal Mail millions

[TrueBlueTerrier]

http://www.cwu.org/news/archive/pay-bac ... lions.html" onclick="window.open(this.href);return false;

CWU says the government's excuses for failing to price Royal Mail correctly keep changing and is calling for redress after the bungled sale of Royal Mail ahead of tomorrow's BIS Select Committee which will see MPs grill Vince Cable and Michael Fallon, along with the Shareholder Executive and advisers Lazard. Evidence shows that the government and its advisors undervalued the company and lost the taxpayer hundreds of millions of pounds when it was floated in October.

Billy Hayes, CWU general secretary, said: "Tomorrow we're expecting more Cablefroth news. The government's excuses keep changing for why they got the Royal Mail price wrong - first it was simply 'froth', then it was the union's fault, and then they said they expected it to rise. Will there be a new excuse tomorrow?

"Hundreds of millions of pounds of taxpayers' money have been lost because of the failure of the government and its advisors to accurately value Royal Mail. In other situations this would be gross incompetence or even theft. Vince Cable should resign for his misjudgement in this case.

"Private shareholders have lined their pockets at the expense of the taxpayer following the huge leap in the share price. A windfall tax or some way of recouping that money should be considered. At the very least the institutions which advised the government should not receive any further payments - which are discretionary.

"We hope the Select Committee will get to the bottom of who is responsible for deciding and agreeing the bargain basement sale price of Royal Mail and shed some light on what can be done to redress the situation."

The Royal Mail share price was set at 330 pence when it floated on 11 October. It soared by more than a third within minutes of trading and reached over 587p earlier this month. Within a week the share price had broken the 500p mark - an increase of more than 50%. Last week the share price stood at more than 550p - meaning the government undervalued the company by more than £2bn and taxpayers have lost £1.3bn on the sale of shares as the government would have raised £3.3bn in share sales instead of the £1.98bn (before fees, expenses and underwriting commissions) it actually raised.

It has been reported that JP Morgan valued Royal Mail at between £7.75 and £9.95bn, while Citi Bank put an upper valuation of £7.3bn on the company and Deutsche Bank argued that Royal Mail could be worth between £6.4bn and £6.9bn. However, the government decided to float the company on a much lower share price of 330p despite shares being oversubscribed twenty times over.

The Select Committee is taking place at 9:30 tomorrow morning in the Grimond Room, Portcullis House.

People attending:

Rt Hon. Vince Cable MP, Secretary of State for Business, Innovation and Skills
Rt Hon. Michael Fallon MP, Minister of State for Business and Energy, Department for Business, Innovation and Skills
Mark Russell, Chief Executive, Shareholder Executive
William Rucker, Chief Executive, Lazard