Post Office snatched out of liquidation and into business rescue
The North Gauteng High Court has placed the South African Post Office (Sapo) in business rescue.
This comes after a landlord to which the Post Office owed rent, Bay City Trading, received an application to place the failing state-owned mail carrier under provisional liquidation.
The South African government approached the court to oppose the final liquidation and have the Post Office instead put into business rescue — which it has now received.
In her ruling, Judge Elmarie van der Schyff wrote that government has already budgeted a R2.4-billion bailout for the Post Office and pledged a further R3.8 billion.
However, she also said it disturbed her that the government seemed to be trying to force the court’s decision by withholding the funds unless the Post Office was placed under business rescue.
“To hold a view that the taxpayers’ losses must be cut and that SA Post Office must be finally liquidated is simplistic and does not account for the intricate relationships and responsibilities that exist,” stated Van der Schyff.
Van der Schyff said that the Post Office is a vital national government service platform that renders an essential service, particularly in rural and remote areas.
“In the international context, the interruption of the Post Office’s international obligations might have dire consequences for all South Africans who use the postal services of other countries,” she said.
Prof Elmarie van der Schyff
While putting the Post Office in business rescue would likely cost fewer jobs than a final liquidation, the judge said substantial job losses were unavoidable.
“The harsh reality is that the facts point to that SA Post Office’s workforce needs to be extensively curtailed for the [it] to survive,” stated Van der Schyff.
Business Day reported that it appears government plans to cut 7,000 jobs, saving over R1.3 billion in salaries annually.
However, that is a drop in the bucket relative to the financial predicament the Post Office finds itself in.
According to unaudited management accounts filed in court, the Post Office posted a preliminary loss of R2 billion for the 2022/23 year. The loss in 2021/22 was R2.18 billion.
Post Office CEO Nomkhita Mona said in an affidavit that the cash-flow projection for 2023/24 reflects a deficit of R1 billion.
In its most recent financial results, the Post Office owed over R4.4 billion to creditors, with its debt exceeding its assets by R4 billion.
Van der Schyff’s judgement mentions that the Post Office now owes creditors over R9 billion.
Communications minister Mondli Gungubele revealed in response to a Parliamentary question that the Post Office closed 314 branches in the past three years — almost a quarter of its network.
Before the Covid–19 pandemic, there were roughly 1,300 Post Office branches nationwide.
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