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30 September 2014

Maltapost To be fully privatised... Lombard takes majority equity

 - Tuesday, 31 July 2007, 00:00

The government yesterday announced the total privatisation of Maltapost plc by the transfer to Lombard Bank Malta plc of a 25 per cent shareholding in the company, taking Lombard’s holding from the existing 35 per cent to a majority shareholding of 60 per cent.

Full privatisation will be made in two stages: firstly there will be the transfer to Lombard Bank Malta plc of the 25 per cent shareholding, making Lombard the majority shareholder.

At a second stage, the government will sell via an initial public offering its remaining 40 per cent shareholding. Maltapost will be listed on the Malta Stock Exchange.

The government said this was consistent with its policy of giving up its commercial operations to limit itself to regulating in the interest of the consumer.

The situation today was that the market for postal items exceeding 50 grams was totally liberalised and open to competition. It did not make sense for the government to operate in competition with the private sector. The EU was also drawing up regulations so that from 2009, the postal market would be open to competition. The postal monopoly has seen its days and it did not make sense for the government to continue operating in it.

The government, through the Malta Communications Authority, would ensure that universal postal services obligations would at all times be satisfied by Maltapost in the interests of consumers.

The share transfer at a consideration of Lm1,217,585, represents one-and-a-half times the net asset value of the shares according to the last audited accounts of September 2006. On the average profit registered by the company over the last three years, this price represented a high price to earnings ratio of 68. The government considered the transaction to have been concluded at an advantageous price apart from it also holding significant strategic value.

The government said it also wanted to ensure that privatisation would affect the employees positively. It had been agreed with Lombard Bank plc that all Maltapost employees would have their employment assured until they came to retire or resigned, and this by agreeing that Maltapost plc would not issue any termination notices to its staff, except for reasons of discipline as laid down under the law.

Other points agreed to include: Lombard Bank Malta plc agreed to facilitate the government’s decision to sell its shareholding – Maltapost plc would remain a national operator and fulfil its universal postal obligations with a high-quality service; for the coming five years Lombard would not transfer shares in the company that held the shares in Maltapost and that until the government sold all its shareholding, any changes in the memorandum or articles of association of the company would require unanimous consent.

The share transfer to Lombard Bank Malta plc, as well as the floating of Maltapost plc requires Cabinet approval. Both the government and Lombard Bank plc will be meeting with the Union Haddiema Maghqudin, which represented the majority of employees at Maltapost plc.

The government said it believed that a privatised Maltapost would be in a much better position to compete in this vital sector of the Maltese economy. Apart from this, Lombard Bank Malta plc had, during its period of minority shareholding, shown its commitment to Malta, the commercial community as well as commitment to its employees. This augured well for the future of Maltapost plc, for the service its clients expected, and for the employees who earned their livelihood from it.

In its own statement, Lombard Bank Malta plc announced “that its wholly-owned subsidiary Redbox Limited has on 30 July 2007 entered into an agreement with the government of Malta for the acquisition of 700,000 ordinary shares of Lm1 each, representing 25% of the issued and paid-up share capital of Maltapost plc. The agreement is subject to Cabinet approval.

“This acquisition will raise the shareholding of Redbox Limited to 60% effectively resulting in Maltapost becoming a subsidiary of Lombard Bank Malta plc. The increased shareholding in Maltapost plc will enable Lombard Bank to expand its market presence and permits both companies to benefit in the medium term from synergies including a shared and complementary business vision and better utilisation of resources.

The bank is confident that both parties hold the necessary human and technical resources to ensure that staff, customers and shareholders of both the bank as well as Maltapost will stand to benefit.”

In a statement, the Union Haddiema Maghqudin requested an urgent meeting with the government to discuss the privatisation process.

In a letter sent to Industry, Investment and IT Minister Austin Gatt, the UHM said that in the collective agreement, it had insisted that the workers’ conditions should be safeguarded if and when the company’s privatisation took place.

It however noted with satisfaction that the government statement had emphasised that none of the employees will be dismissed.

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