Partial sale of Royal Mail delayed

by Noelle McElhatton, marketingdirectmag.co.uk 29-Jun-09, 10:56

LONDON - Plans to sell a minority stake in Royal Mail to a private company are being delayed due to a crowded legislative schedule.

Lord Mandelson, the business secretary, says the bill which would allow the move was being "jostled for space" in the government's legislative programme.

Royal Mail rival TNT was touted as the most likely buyer of the 30% stake but so far the only bidder is CVC Capital Partners, the private equity firm. It is thought to have submitted an initial bid of less than £2billion.

The bill was due to go to Parliament before the summer break but Lord Mandelson told the BBC this morning that it would now happen "later".

In an interview with the Financial Times, the business secretary implied that the recession meant that a partial sell-off at this time would not raise the required amount of cash.

"I want to retain the slot, but... I have to concede that the original linking of the legislative passage and the bidding process for the strategic partner has been decoupled," Lord Mandelson told the FT.

But Lord Mandelson is still insisting that Royal Mail cannot survive without an injection of external cash and operational efficiencies. He told BBC One's Breakfast that Royal Mail’s finances were "reaching crisis point".

The postal service’s pensions deficit is said to be near to £8bn.

The Royal Mail reforms are opposed by unions and many Labour MPs.