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Royal Mail secures 1.4 billion pounds debt facilities ahead of IPO
September 11, 2013 / 10:45 PM / 4 years ago

Royal Mail secures 1.4 billion pounds debt facilities ahead of IPO

(Reuters) - Britain’s Royal Mail has secured 1.4 billion pounds ($2.21 billion) in debt facilities to support the 497-year-old state-owned delivery service as it goes public, Sky News reported on Tuesday without citing sources.

A Royal Mail postal worker walks through the car park of a sorting ofice in Altrincham, northern England July 10, 2013. REUTERS/Phil Noble

The government is expected to announce the details of the privatization before stock markets open in London on Thursday, the broadcaster said on its website, citing people close to the situation.

Royal Mail is going public to raise funds to modernize its delivery networks, in what would be the country’s largest privatization in decades.

Sky said a syndicate of banks had given Royal Mail two separate borrowing facilities, worth 800 million pounds and 600 million pounds. The funds are intended to support Royal Mail in its first years as a listed company.

Thursday’s flotation announcement will also address the Communication Workers Union’s (CWU) threat to strike, Sky said, citing people familiar with the matter.

The CWU, which represents most of the postal service’s 150,000 staff, said this month it would send out strike ballot papers on September 20 if an agreement could not be reached with the government about post-privatization salaries and pensions. The CWU has relentlessly opposed Royal Mail’s privatization and rejected its three-year pay offer in July.

As part of the flotation, the government is handing a 10 percent stake in the firm to Royal Mail staff for free.

The Department of Business, Innovation and Skills said a decision had not been made about the timing of the IPO and Royal Mail declined to comment.

Sky said this week, without citing sources, that the government on Thursday plans to announce an October floatation of Royal Mail’s shares.

Goldman Sachs (GS.N) and UBS UBSN.VX are lead advisers for the share sale.

($1 = 0.6324 British pounds)

Reporting by Richa Naidu in Bangalore; Editing by Richard Chang

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