SA Post Office business rescue practitioners ask Treasury for R3.8bn bailout

The business rescue practitioners of the SA Post Office have formally asked the government for additional funding of R3.8-billion, which is crucial to keep the state-owned enterprise (SOE) going while it is operational and its financial affairs are being restructured.

If the government does not agree to the funding, the SA Post Office’s business rescue process, which has been going on for more than a year and is close to conclusion, could fail and force the SOE into liquidation. In this worst-case scenario, the SA Post Office’s doors would permanently close, along with its 657 branches across the country, and its remaining 6,208 workers would be out of a job.

The SA Post Office would become the second SOE to be liquidated, with the first being the state-owned airline SA Express, which ceased operating in 2020, but was liquidated in 2022.

Read more: SA Express placed under provisional liquidation

In an update to creditors and affected parties of the SA Post Office, the SOE’s joint business rescue practitioners, Anoosh Rooplal and Juanito Damons, have confirmed asking the National Treasury for additional funding worth R3.8-billion.

This is over and above the R2.4-billion that the SA Post Office received from the Treasury in 2023, which was used to pay creditors (such as landlords for the SOE’s branches) and retrenchment packages, of which the final payments are due in November.

Since the SA Post Office entered into business rescue in July 2023, Rooplal and Damons have focused on cutting costs at the SOE and reducing its debt load. They said about 4,875 SA Post Office workers had been retrenched, 366 branches across SA had been permanently closed and creditors had been asked to write off about 88% of the money owed to them, allowing the SOE to reduce its debt burden from R8.7-billion to R440-million by 30 June.

Over the past nine years, the government has given the SA Post Office cash bailouts amoiunting to R12.7-billion (excluding the requested R3.8-billion), a count by Daily Maverick has shown. Arguably, the previous bailouts were a futile exercise because they failed to return the SA Post Office to operational and financial sustainability.

Rooplal and Damons are yet to receive a response to their request for additional funding from the Treasury, which is preparing the Medium-Term Budget Policy Statement (MTBPS) that will be delivered next month.

Although the MTBPS has, historically, not been the event for new government spending programmes to be unveiled, Finance Minister Enoch Godongwana could use it to announce additional financial support for the SA Post Office.

The Cabinet, under the sixth administration, has already agreed (in principle) to provide more money to the SA Post Office. However, the final decision rests with Godongwana.

The financial situation of the SA Post Office remains desperate, with its executives warning in Parliament that the SOE is set to run out of money by October if it is not given the R3.8-billion, according to News24.

What the R3.8bn would be used for

If Godongwana grants the requested R3.8-billion during the MTBPS, Rooplal and Damons would use the funding to pay outstanding creditors, including the SA Revenue Service, Post Office Retirement Fund and Medipos Medical Scheme. These creditors are set to receive a further top-up dividend of 18 cents in the rand, amounting to R125-million, according to the approved SA Post Office business rescue plan.

The balance of the funding will go towards restructuring the SA Post Office’s operations. A restructured SA Post Office will have a renewed focus on motor vehicle licensing services, while its logistics depot network across SA will be positioned as an attractive partner to retailers in the e-commerce space and the SOE will partner with private sector players in the mail and parcel goods delivery industry.

Rooplal and Damons are open to the SA Post Office partnering with the private sector, with the business rescue practitioners saying they were “proactively and reactively considering mutually beneficial partnerships” for the SOE. Some of these restructuring ideas were floated by Mark Barnes, the former CEO of the SA Post Office.

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Before quitting more than five years ago, Barnes warned that the SA Post Office would die if it did not adapt to a world of rapid digitisation.

Barnes proposed that the SA Post Office use its extensive footprint (reaching rural areas) to venture into new services such as taking bank deposits, allowing pupils and educators to download educational materials, distributing medicines such as antiretrovirals, offering funeral policies, and merging the SA Post Office technology and database with those of the Department of Home Affairs to issue/collect identity documents/cards and passports. However, Barnes’ ideas were shot down by politicians. DM