Black cab drivers in line for windfall from demutualisation

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The Independent Online

Would you Adam and Eve it? Thousands of London's black cab drivers could get a £5,000 windfall payment by turning their mutual society into a private company.

Would you Adam and Eve it? Thousands of London's black cab drivers could get a £5,000 windfall payment by turning their mutual society into a private company.

Drivers belonging to the Radio Taxis group will vote next month on a proposal that would see £10m injected into the black cab operator. The deal would bring a windfall dividend payout of £1,100 plus 1,000 shares for each of the group's 2,500 drivers.

An American entrepreneur, Brian McBride, head of the Yellow Cab Company of Cleveland in the US, is investing £3.5m for a 26 per cent stake.

The rest of the money will come from bank loans and a leasing deal. The funding package will allow Radio Taxis to diversify into related areas, such as a courier business. Geoffrey Riesel, the chairman of Radio Taxis, said customers wanted a "one-stop shop".

"This will make my drivers into stakeholders. If the company does well, they will do well," said Mr Riesel, a former driver.

The shares, estimated to be worth almost £4,000, will be traded on an internal market. Mr Riesel said the deal would provide cabbies with a "nest egg" on retirement by giving them the opportunity to sell the shares.

Radio Taxis was founded 50 years ago by a group of owner drivers. There are over 20,000 black cabbies in London, with ComCab being the biggest operator. Drivers working for Radio Taxis pick up about 60 per cent of their customers off the street. The remainder are located via the radio, using the group's global positioning system, which enables customers to book the nearest cab at any given moment.

Mr Reisel said he had also discussed a deal with private equity players but found them unsuitable. "We needed someone who shared our vision, values and respected our members' desire to retain majority control... Brian McBride is perfect."

In order for the deal to go through, at least 75 per cent of Radio Taxis' members who respond, must vote in favour at the first of two meetings on 16 May.

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