Post Office completely insolvent with R12.5-billion debt
The South African Post Office (SAPO) is insolvent, and its debt obligations have increased to R12.5 billion.
This is according to a statement from the business rescue practitioners this week, who said the state-owned company must improve revenue and implement an effective and efficient cost structure to become factually solvent.
Joint Business Rescue Practitioners Anoosh Rooplal and Juanito Damons have been working with Sapo management to address its financial issues.
“The SAPO asset base is dwarfed by its total liabilities of approximately R12.5 billion as of 31 July 2023,” they said.
Rooplal said addressing the decline in the Post Office’s revenue, reducing costs, effecting key structural changes in the business model, and identifying additional sources of income is critical to the state-owned company’s success.
“The success of the SAPO Business Rescue is predicated on arresting the cash flow bleed whilst also allocating capital to facilitate the company being able to service clients effectively,” he added.
After analysing the Post Office’s employee base, the Rooplal and Damons identified several disciplinary cases relating to employee misconduct that had been stalled before they got involved.
They noted that some of these cases are high-profile and related to senior management, and that they hope to finalise them “in the coming weeks”.
Rooplal and Damons monitor and review staff salaries, which they note continue to be paid. They have also held engagements with the Post Office’s four medical schemes.
“These engagements and payment of contributions from July onwards led to the reinstatement of payment to the medical aids from 1 August 2023, although not all are allowing access to benefits just yet,” they said.
For reference, the Post Office has been in hot water for failing to pay staff medical aid and pension fund contributions despite deducting them from wages.
The business rescue practitioners have committed to pay contributions and have given employees the option to choose an alternative medical aid, should they wish to.
Due to its financial situation, the Post Office has been forced to shut down many branches across the country as it has been unable to pay rent or utilities.
Rooplal and Damons say this is also an area of focus for them.
“We know that many branches are not operational due to lack of payment of rent to landlords or IT issues or operating manually due to electricity shutdowns resulting from the non-payment of electricity accounts,” said Rooplal.
“We are aware that certain branch conditions are not optimal and we are looking to rectify this going forward. This will however take some time as we try and navigate the entity out of the financial distress that it is currently experiencing.”
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