Royal Mail union not won over by Czech bidder’s commitments
The commitments offered by the Czech tycoon seeking to buy Royal Mail’s parent firm do not go far enough, according to the union leader representing its 112,000 UK frontline workers.
Communication Workers Union (CWU) general secretary Dave Ward made his remarks following talks with representatives of Daniel Kretinsky’s EP Group.
International Distribution Services (IDS) revealed last week it had formally accepted a revised £3.6bn offer for the business, which includes the international parcels arm GLS.
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Under the full terms, the total value to shareholders represents a premium of more than 70% to the IDS share price before the first takeover proposals came to light.
IDS said that if the deal, which is subject to shareholder approval and official scrutiny, was to complete the new owner would maintain its UK tax residency, headquarters, branding and existing employment rights.
EP Group’s ownership would also include a commitment to the current Royal Mail universal service obligation of one-price-goes-anywhere first-class post six days a week, the company said.
It added the new owner had “no intention to make any material changes to overall headcount or reductions in the number of frontline workers” beyond existing plans.
The union’s argument
Tuesday’s talks were held against a backdrop of relative peace between the union and IDS following several bitter disputes.
The last, which lasted more than a year, resulted in a series of strikes ahead of Christmas 2022.
It was only ended when workers accepted a new pay settlement in return for reforms including regular Sunday working.
Relations have remained frosty since on several grounds including the treatment of staff.
The CWU had also opposed plans for Royal Mail to water down its universal service obligation on cost grounds.
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Mr Ward called for debate on Royal Mail’s ownership to be a central issue in the 4 July general election following Tuesday’s talks.
“The meeting was useful and constructive and further meetings will take place including the direct involvement of Daniel Kretinsky”, he said.
“We made it very clear that the current commitments from EP Group are neither strong or long enough.
“Daniel Kretinsky has openly stated he wants to own Royal Mail for the rest of his life – we need commitments for the workforce that match that level of ambition.
“The CWU put forward our wide-ranging concerns and our view that we need to see a completely new ownership and business model for Royal Mail – one that gives all employees a real stake in the future of the business. Both parties have agreed to explore this further.
“Royal Mail have led a prolonged and deliberate attack on its own workforce which continues to this day in many workplaces. Representatives of EP Group understood the reality that unless the workforce are on board, the company will never succeed.
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“Alongside this meeting we are increasing our plans to engage the government and Labour Party on the takeover bid. This bid needs to be heavily scrutinised and debated, particularly in the run-up to a general election.
“The CWU position is clear. We do not support a foreign equity company taking over Royal Mail. At the same time, we have absolutely no confidence in the current Board of the company.
“Royal Mail should be renationalised but the political climate makes that very difficult at the moment.
“Our job now is to make sure our members are heard at every opportunity as this takeover bid unfolds,” he concluded.
For his part Mr Kretinsky, who is already a 27% shareholder in IDS, has promised the company would be safe in his hands.
He said last week EP has “decades of experience in owning critical national infrastructure” and IDS could “become one of the largest postal logistics groups in Europe”.
“The EP Group has the utmost respect for Royal Mail’s history and tradition, and I know that owning this business will come with enormous responsibility – not just to the employees but to the citizens who rely on its services every day,” he added.
A trio of property giants has lodged a protest against a radical financial restructuring that will see Cineworld imposing steep rent cuts on its landlords.
Sky News has learnt that British Land, Landsec and Legal & General Investment Management all voted against the cinema operator’s restructuring plan this week.
Cineworld has confirmed plans to close six of its UK multiplexes, but documents circulated to creditors show almost 50 others are in categories requiring landlords to agree to revised rent deals in order to ensure their long-term viability.
Although they carry significant influence in the commercial property sector, the trio’s protest will have no impact on the outcome of the company’s proposals, since its owners are now also among its largest creditors, meaning they can effectively force the deal through.
According to documents sent to creditors during the summer, 33 sites – categorised as Class B – “require a reduction of rent to ERV [Estimated Rental Value] Rent in order to place the sites on a viable long-term footing”.
A further 38 of Cineworld’s cinemas would be unaffected, while another 16 Class C1 and C2 leases require reductions to either turnover rent or zero rent in order to render them financially viable.
The documents added that the company did not have sufficient funding to meet a quarterly rent bill on June 24 of £15.9m.
“The UK group did not have sufficient liquidity to make the June 2024 Rent Payment and required further funding from the US Group to meet this liquidity need.
“Absent this funding, the UK Group would have been insolvent on a cashflow basis.”
Cineworld is being advised by AlixPartners.
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Other cinema operators are now poised to step in to take over some of Cineworld’s sites.
The company trades from more than 100 locations in Britain, including at the Picturehouse chain, and employs thousands of people.
Cineworld grew under the leadership of the Greidinger family into a global giant of the industry, acquiring chains including Regal in the US in 2018 and the British company of the same name four years earlier.
Its multibillion-dollar debt mountain led it into crisis, though, and forced the company into Chapter 11 bankruptcy protection in 2022.
It delisted from the London Stock Exchange last August, having seen its share price collapse amid fears for its survival.
Cineworld also operates in central and Eastern Europe, Israel and the US.
A long-running measure of consumer confidence has slumped to levels last seen at the start of the year following warnings of “tough choices” ahead in the looming budget.
GfK’s Consumer Confidence Index fell seven points in September to minus 20, with significant drops in predictions for personal finances and the general economy over the coming year.
The report’s authors suggested it was “not encouraging news” for the new government, which has made growing the economy its top priority.
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But within weeks of taking the post of chancellor, Rachel Reeves – followed by prime minister Sir Keir Starmer – moved to warn of a legacy £22bn “black hole” in the public finances and said it would result in a painful budget on 30 October.
Among measures already taken include cuts to winter fuel payments, leaving up to 10 million pensioners up to £300 worse off, and inflation-busting public sector pay settlements.
Tax rises and spending cuts are widely expected in next month’s statement to MPs though The Times reported on Friday that a decision by the Bank of England to slow a programme of loss-making bond sales would leave Ms Reeves £10bn better off than she had anticipated.
It added that she was still expected to push forward with her budget plans anyway as a signal of her commitment to fiscal discipline.
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The latest snapshot on the public finances, released by the Office for National Statistics (ONS) on Friday showed net borrowing of £13.7bn during August.
Its chief economist, Grant Fitzner, said: “Borrowing was up by over £3bn last month on 2023’s figure, and was the third highest August borrowing on record.
“Central government tax receipts grew strongly, but this was outweighed by higher expenditure, largely driven by benefits uprating and higher spending on public services due to increased running costs and pay.”
Consumer spending accounts for around 60% of the UK economy.
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Data released separately on Friday showed a 1% rise in retail sales volumes during August in the wake of weakness, mostly blamed on poor weather, over the previous couple of months.
The ONS said that the increase was driven by supermarket sales, as demand for BBQ food and drinks rose due to the arrival of some sunshine over the key holiday month.
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It also credited discounting by clothing retailers.
The data chimes with the latest updates from big retailers, including Next and B&Q’s owner, which have spoken of weak demand for so-called big ticket items such as home furnishings and kitchens respectively.
GfK’s closely-watched survey showed expectations for the general economy over the next 12 months fell by 12 points to -27, while the forecast for personal finances was down nine points to -3.
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Commenting on its key measures, including the headline figure, consumer insights director at GfK Neil Bellamy said: “These three measures are key forward-looking indicators so despite stable inflation and the prospect of further cuts in the base interest rate, this is not encouraging news for the UK’s new government.”
He added: “Strong consumer confidence matters because it underpins economic growth and is a significant driver of shoppers’ willingness to spend.
“Following the withdrawal of the winter fuel payments, and clear warnings of further difficult decisions to come on tax, spending and welfare, consumers are nervously awaiting the budget decisions on October 30.”
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