The South African Post Office’s (SAPO) business rescue practitioners said they believe there is a reasonable prospect of rescuing the SAPO, based on the R2.4 billion government bailout and an additional R3.8 billion for recapitalisation.
The SAPO was placed into business rescue in early July, following an application made after the High Court placed the Post Office into provisional liquidation in February of this year.
The order to place SAPO into business rescue was granted on 10 July, and the court-appointed Anoosh Rooplal and Juanito Damons as the joint interim business rescue practitioners.
Rooplal and Damons convened the First Meeting of Creditors on 24 July. At this meeting, the creditors ratified Rooplal and Damons’ appointments as the SAPO’s business rescue practitioners.
They also requested an extension for the business rescue plan to be published at this meeting, which the creditors approved, and the deadline was extended to 30 November 2023.
The purpose of this meeting was to inform SAPO’s creditors as to whether or not there is a reasonable prospect of a successful business rescue.
Rooplal and Damons said they are “of the view that there is a reasonable prospect of rescuing the SAPO within the ambit of Chapter 6 of the Companies Act”.
“This is based on the allocated R2.4 billion funding from Treasury in the medium-term budget, the additional funding requirement of R3.8 billion to recapitalise the SAPO, the BRPs interventions and the ongoing support from all stakeholders, as well as the Implementation of the restructuring plan.”
These stakeholders included the government, SAPO employees, trade unions and trade suppliers.
Rooplal said the practitioners’ primary objective will be to either rescue the company by restructuring its financial and operational affairs “in a manner that maximizes the likelihood of the company continuing its existence on a solvent basis”.
Should that not be possible, the practitioners will attempt to rescue the company in a way that results in a better return for the company’s creditors and shareholders “that would otherwise have been obtained from the immediate liquidation of the company”.
Jobs at stake
The Post Office has run at a loss every year since 2013 and has failed to compete with private couriers.
The judgment that placed the SAPO into immediate business rescue said it owes creditors more than R9 billion and attributed its financial difficulties to structural issues.
Judge Elmarie van der Schyff said, “The harsh reality is that the facts point to the SA Post Office’s workforce needing to be extensively curtailed for the Post Office to survive”.
According to estimates, SAPO employs over 12,000 people. However, unions say how many people the Post Office employs is unknown.
Postbank will likely receive about R400 million with business rescue, leading to concerns that it will not have the reserves required to qualify as a fully-fledged, state-owned bank.
Placing SAPO into business rescue ensures it will receive the R2.4 billion the National Treasury allocated in February’s budget.
In its business rescue application, SAPO said it needs R3.8 billion of funding and R2.4 billion to execute its turnaround strategy.
This is despite the state-owned enterprise having already been given over R10 billion in bailouts since 2014.