Managers poised to buy Red Star
Thursday 03 August 1995
A management buy-out of British Rail's loss-making Red Star Parcels business is close to being agreed, ending a difficult episode in the rail privatisation programme.
A deal, which could be announced today, comes after the management team were initially ruled out of negotiations in favour of other bidders.
British Rail's Vendor Unit and the management team's advisers, including BZW, were believed to be putting the finishing touches to a deal last night. One of the negotiators said: "The deal is not signed," but refused to discuss it further.
Red Star is among 60 British Rail subsidiaries being sold, but has so far proved the most difficult to spin off because of its poor financial state and strong competition from rivals. Two years ago the Government withdrew Red Star from the market because the lack of interest meant no acceptable offer was made.
A restructuring plan was carried out to cut costs and reduce the annual losses of pounds 9m on turnover of only pounds 43m, and the business was put back up for sale last year.
In February a management buy-out was ruled out as BR's Vendor Unit entered negotiations with the privately-owned British Bus, one of the UK's largest operators.
When British Bus said it could not complete the purchase within the original timescale, negotiations with other possible bidders were re-opened. Two of those on the shortlist were understood to be Security Despatch, a London despatch rider service, and London Caledonian, a private firm.
The management buy-out team is thought to comprise the three Red Star regional managers, including John Holmes, as well as finance and marketing directors. Other executives are also involved in the team.
It is unclear how much Red Star may sell for, though it would be the most important disposal yet by the Vendor Unit.
The latest BR report does not break down Red Star's profits. But in the year to end-March 1995 BR's parcels division, which includes Rail Express Systems as well as Red Star, made operating losses of pounds 14.1m on gross income of pounds 78.4m.
Red Star is the only UK parcels carrier to use the British Rail network and has more than 200 outlets, employing about 1,000 staff. Red Star's rivals fear the company might be sold at a knock-down price to get a deal out of the way.
Negotiations with the management team have been delayed due to the complexity of the deal.
Red Star has 150 operational leases on property that had to be agreed between Railtrack, which owns track and signalling, and the train operating companies.
Of the 60 BR subsidiaries on the market, about 20 sales are planned by the end of 1995. These have included the seven factories of British Rail Maintenance Limited, which has a total turnover of pounds 180m from overhauling locomotives and coaches.
Diving in at the deep end is no excuse for shirking the style stakes
- 1 World Cup 2014: 20 things we learned in Brazil
- 2 Why I'm on the brink of burning my Israeli passport
- 3 War is war: Why I stand with Israel
- 4 L'Oreal cuts ties with Belgium supporter Axelle Despiegelaere after hunting trip photographs
Game of Thrones author George RR Martin says 'f*** you' to fans who fear he will die before finishing Westeros saga
Ian Thorpe gay: Olympic swimmer comes out in Parkinson interview
Pamplona bull run: Man who contributed to a survival guide for the festival falls foul of the raging beasts
Israel-Gaza conflict: William Hague calls for ceasefire but says Israel 'has the right to defend itself'
Supermoon 2014: When and why will the moon look bigger and brighter this summer?
Sustained immigration has not harmed Britons' employment, say government advisers
War is war: Why I stand with Israel
7/7 memorial defaced on anniversary of 2005 attacks with ‘Blair lied thousands died’ graffiti
Australia facing international condemnation after turning around Sri Lankans at sea
Even when it brutalises one of its own teenage citizens, America is helpless against Israel
Socialist Worker called to apologise over ‘vile’ article saying Eton schoolboy Horatio Chapple's death is ‘reason to save the polar bears’
iJobs Money & Business
£70000 per annum: Harrington Starr: Information Security Manager (ISO 27001, A...
£75000 - £85000 per annum + ex bens: Deerfoot IT Resources Limited: Biztalk Te...
£60000 per annum: Harrington Starr: Trade Desk Specialist (FIX, Linux, Windows...
£35000 per annum: Harrington Starr: Service Desk Analyst (Windows, Active Dire...