- POSTED: 12 Sep 2013 14:50
- UPDATED: 13 Sep 2013 01:36
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Britain launched plans on Thursday to sell more than half the state-run postal service Royal Mail in the coming weeks, in the nation's biggest privatisation in decades.
LONDON: Britain launched plans on Thursday to sell more than half the state-run postal service Royal Mail in the coming weeks, in the nation's biggest privatisation in decades.
The announcement is part of the coalition government's strategy to slash the budget deficit, but has sparked anger from trade unions and opposition politicians.
Royal Mail and the government acknowledged in a joint statement that strike action by postal workers unhappy at the part-privatisation of the centuries-old service could not be ruled out.
"Her Majesty's Government today announces its intention to proceed with an initial public offering (IPO) of Royal Mail," said the statement, which added that the flotation on the London Stock Exchange was "expected to take place in the coming weeks".
The coalition government will sell at least 41 percent of Royal Mail, while employees will receive another 10 percent of the shares free of charge.
However, the state will remain flexible over the size of the stake sale, depending on market conditions and investor demand.
The government had already outlined plans in July to privatise more than 50 percent of Royal Mail, after a major restructuring in recent years that was triggered by fierce competition from email.
The privatisation was expected to be the biggest by a British government since former prime minister Margaret Thatcher - who died this year - sold off former state-owned companies British Gas and British Telecom in the 1980s.
Reports say the part-sale of Royal Mail could be worth up to 3.0 billion pounds (US$4.74 billion, 3.57 billion euros).
Royal Mail added on Thursday that it was entering into new debt facility agreements which would "lead to a significant reduction" in borrowing costs.
The government has already agreed to take on Royal Mail's historic pension deficit.
"HM Government is taking action to secure a healthy future for the company," said Business Secretary Vince Cable.
"These measures will help ensure the long term sustainability of the six days a week, one-price-goes-anywhere universal postal service," added Cable, a member of the Liberal Democrats that share power with Prime Minister David Cameron's Conservatives.
However, Chuka Umunna, business spokesman for the opposition Labour party, warned that the privatisation was a "politically-motivated fire sale".
He added: "The government has not addressed the huge concerns which remain on the impact the Royal Mail sale will have on consumers, businesses and communities, but ministers are ploughing on regardless."
The government has argued that partial privatisation will allow Royal Mail the freedom to raise capital, continue modernising and meet booming demand for online shopping that generates parcel traffic.
But that has caused anger among unions who fear the sell-off will lead to job cuts and a poorer service for customers.
Around 150,000 Royal Mail staff will be eligible to get a free stake in the business, in the largest employee share scheme of any major British privatisation for almost 30 years.
Royal Mail staff will be allowed to buy additional shares, while members of the public can purchase a minimum of 750 pounds in stock. The biggest buyers of shares are set to be large institutions.
The Communication Workers Union, which is planning to ballot its members for possible strike action over jobs, pay and other issues linked to privatisation, was meeting on Thursday with Royal Mail chief executive Moya Greene.
"We remain convinced that privatisation is the wrong decision for Royal Mail," said CWU general secretary Billy Hayes.
"Privatisation would put jobs and services at risk and lead to higher prices for customers."
The government added that talks between the Royal Mail and the CWU were continuing in a bid to avert industrial action.
Royal Mail recently enjoyed a surge in annual profits thanks to the increasing popularity of online shopping, and owing also to deep cost-cutting and big increases in stamp prices.