FORMS

Monday, September 16, 2013

Royal Mail privatisation - the key questions answered

All you need to know about the planned privatisation of Royal Mail, from the possible date to possible consequences

When will Royal Mail float?

The initial public offering (IPO) will take place "in the coming weeks", the business secretary, Vince Cable, said in his official announcement to the stock exchange on Thursday. It means the flotation could take place at the same time as more than 100,000 postal staff walk out on the first nationwide strike since 2009. Union members will vote on strike action over pay and conditions on 20 September, which could lead to strikes from 10 October.

How much money will the government make from the sale?

City experts reckon Royal Mail is worth £2.5bn to £3bn, but the amount the government will collect depends on how much of the business is sold. The government will float a minimum of 41% of the company (worth about £1.2bn), but is likely to sell more shares if there is strong demand.

How many shares will postal staff get?

Royal Mail's 150,000 employees will be given 10% of the company's shares for free. If the flotation values Royal Mail at £3bn, as expected, each postal worker's stake will be worth about £2,000. They will also share a further £13.3m in dividend payments in the first year (about £90 each), and more in following years.

Can I buy shares?

Yes. Anyone over 18 can buy a minimum of £750 worth of shares online here. When the offer opens, direct applications can be made online using a debit card or by downloading and returning an application form with a cheque or bankers draft by post.
Packs containing application forms will be available from selected Post Office branches.
A list of the firms acting as intermediaries for the flotation can be found online.
Michael Fallon, the business minister, said he hopes "millions of people" will end up being owners of this business.
Royal Mail employees have preferential access to buy more shares, in minimum £500 chunks.
Banks, pension funds, and other investors will buy the rest of the shares.

Won't Royal Mail staff simply sell their free shares straight away?

There's a three-year lock-in, so they won't be able to. They will receive dividends during that period.

Why does the union oppose privatization, if staff are getting free shares?

Billy Hayes, general secretary of the Communication Workers Union (CWU), said 96% of Royal Mail staff voted against the sale and are not prepared to "sell their souls" for such a small stake in the business. "Postal workers know that privatisation would mean the break-up of the company, more job losses, worse terms and conditions, and attacks on their pensions," he has said. "It would be a wrecking ball to the industry they work in."

What does Royal Mail privatisation mean for the Post Office?

The government claims the Post Office will be unaffected by Royal Mail's privatisation, since the companies were split apart in April last year. The two businesses have also signed a 10-year agreement to work together, with the Post Office acting as Royal Mail's "front office".
However, the National Federation of Sub-Postmasters (NFSP) has called for a halt in the sale until safeguards are put in places to protect post offices. George Thomson, general secretary of the National Federation of SubPostmasters, said: "I am extremely disappointed and concerned that the government is pressing ahead with a plan that will undoubtedly jeopardise the future of thousands of post offices. We simply have not had the promised new government work that needs to be delivered before the sale of Royal Mail and which would safeguard the future survival of an independent Post Office."

Will a privatised Royal Mail still deliver to every address in the UK six days a week?

Cable said the sale will not affect the government's promise to continue to deliver to 29m addresses Monday to Saturday, and said privatisation will actually "help ensure the long-term sustainability of the six-days-a-week, one-price-goes-anywhere universal postal service". However, the union warns that private owners will campaign to end the expensive obligation. The Save Our Royal Mail campaign has pointed out that the government has not pledged to maintain the universal service obligation beyond 2022, when it is due to be reviewed.


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