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The sale of British Rail's Red Star express parcels business to a management buy-out team was announced today by John Watts, Minister for Railways and Roads.
Welcoming the sale, Mr Watts said:
"Throughout the British Rail privatisation the Government's aim has been to combine value for money for the taxpayer with the best prospects for the rail industry and its staff. Red Star is no exception. With the backing of City institutions, the sale to the management team offers the business its best chance of developing what are considerable competitive advantages.
"Red Star is a special rail business able to offer a nationwide premium service. I want to see this business continue by making a fresh start under private ownership. Away from the constraints of the public sector it will be free to build on its existing strengths and develop new services and products."
Using space on passenger trains, Red Star offers a nationwide express service from 'Parcel Points' at stations. In early 1994 the business was reorganised to focus on the premium end of the parcels market, where the speed advantages of rail are most significant. The parcels service had a revenue in 1994/95 of more than #20 million. Mr Watts continued: "I welcome the fact that the business has been sold to the management team. Their specialist railway knowledge and the commercial experience of their financial backers will give the business the best possible launch in the private sector.
"This sale is good news for Red Star's customers, staff, and the taxpayer who will no longer have the burden of a historically loss-making operation."
Notes to editors
1. The British Railways Board reached agreement in principle for the sale of Red Star express parcels business to a Management buy-out (MBO) team on 3 August, subject to the approval of the Secretary of State for Transport.
