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German railway starts privatization in financial crisis
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09:03, September 27, 2008

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German state-owned rail operator Deutsche Bahn (DB) said Friday it will partly privatize itself from Oct. 27, offering nearly one quarter of the company to investors.

German investors will be able to bid from Oct. 13 onwards for the 24.9 percent stake in a company named DB Mobility Logistics AG. An international road show explaining the deal to institutional investors begins the same day, according to DPA.

The proceeds from the sale will be shared by the German federal government and the rail company itself under a political compromise forged earlier this year in Chancellor Angela Merkel's coalition government.

The listing date will be in the current financial crisis, which surprised the market. However, both German government and DB doesn't favor delay.

Merkels' deputy spokesman Thomas Steg said Friday that privatization is a complicated process, the timetable can't be altered according to "short-term, opportunistic considerations."

DB's Chief Executive Hartmut Mehdorn said he was confidence about the timetable and have held talks with potential investors. Mehdorn is chief of both the subsidiary to be privatized and the parent company which will own 75.1 percent of the unit.

On Thursday, according to the International Herald Tribune newspaper Russian Railways wanted to acquire 5 percent of the German company in the privatization.

The stock of DB Mobility Logistics is to be traded on the prime standard market at the Frankfurt Stock Exchange. DB said it would also offer the stock to private investors in Japan, but would not make any offer in the United States before Germany's BaFin regulatory agency approves it.

The financial crisis still affected the value of the privatizing stock package, only months ago, it was widely seen as worth up to 8 billion euros (about 11.2 billion U.S. dollars), while at present analysts expected it may raise less than 5 billion euros (7 billion dollars), according to Financial Times Deutschland.

DB Mobility Logistics has 178,000 employees, while the rest of DB has 63,000 staff responsible for tracks, stations, land and other activities. (1 U.S. dollar = 0.7143 euro)

Source:Xinhua



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