Ian Murray – 2014 Parliamentary Question to the Department for Business, Innovation and Skills

The below Parliamentary question was asked by Ian Murray on 2014-04-28.

To ask the Secretary of State for Business, Innovation and Skills, when the stabilisation period in respect of the privatisation of Royal Mail, as detailed in the engagement letter between his Department and the underwriting banks, ends; and how that period has been defined.

Michael Fallon

The stabilisation period, also known as a "greenshoe" or "over-allotment" option, is a market-standard provision that allows the Initial Public Offering’s (IPO) stabilisation manager to provide share price stabilisation (if required) for up to 30 days post-commencement of conditional dealings. In the case of the Royal Mail, the stabilisation manager was UBS and the stabilisation period ended on 8 November.

In the engagement letter, the payment of the discretionary fee was linked to the ending of the stabilisation period. However, we informed the banks involved that a decision would not be taken in the timeframe set out in the engagement letter given the volatility of the Royal Mail share price after the IPO.

We have not set a rigid timetable for the decision on the payment of the discretionary fee which remains unpaid.