One of South Africa’s oldest companies on the verge of going bust

The South African Post Office (SAPO) is experiencing severe challenges and needs R3.8 billion in funding to fully implement its business rescue plan or face going bust.

The SAPO is one of South Africa’s oldest companies, having started in 1792 when acting governor Johan Isaac Rhenius issued a proclamation to establish a post office in a small room next to the pantry in the Castle in Cape Town.

Since then, the Post Office has continued to grow with South Africa, and has become a fixture in many South Africans’ lives.

However, the state-owned entity has struggled to modernise well and fast enough to keep up with consumers’ evolving needs and has faced financial difficulties for the past decade.

The Post Office hit rock bottom in 2023 when it was placed in provisional liquidation following a successful application by a group of creditors.

The provisional liquidation resulted from SAPO’s inability to pay its debts to creditors to continue operations.

This led to the Cabinet approving that the Post Office be placed under voluntary business rescue based on the Department of Communications and Digital Technologies (DCDT) business continuity report.

The business rescue option was primarily premised on supporting the SAPO to implement its ‘Post Office of Tomorrow’ Strategy.

Therefore, the state-owned entity was recapitalised with R2.4 billion to implement this strategy. 

Since entering business rescue, the Post Office has made significant changes, including the controversial decision to cut 7,000 workers.

It is difficult to know whether this has made any difference to the SAPO’s financial performance, as the state-woned entity has not released its annual results since the 2022/23 financial year.

In that year, the SAPO reported a deficit (loss) of R2.16 billion and negative assets of R7.48 billion.

While no detailed information about the SAPO’s financial performance is available, it does not appear as though the Post Office is close to recovery.

Billions or bust

In February 2025, the Communications Workers Union (CWU) warned that the SAPO may cease functioning by the end of that month.

The CWU’s national bargaining coordinator, Nathan Bowers, said the shutdown could have happened because the Post Office has not received the R3.8 billion bailout it was promised.

The SAPO previously said this bailout is necessary to complete its business rescue plan and create a sustainable organisation.

SAPO joint Business Rescue Practitioner Anoosh Rooplal clarified to Daily Investor that the R3.8 billion was not a request from the SAPO or its BRPs. 

“This R3.8 billion and R2.4 billion allocation was contained in the application to court to place the entity in business rescue,” he explained. 

“This was the basis on which the business rescue plan was approved. The monies were the basis of the plan and turnaround strategy.”

“To be clear, the request for payment was based on a prior allocation from the SAPO’s shareholder.”

He added that the BRPs are still in talks with the DCDT surrounding the payment of the funding of R3.8 billion.

However, he said the SAPO received a separate allocation of R150 million in the week of 10 March 2025 from the DCDT as working capital funds.  

“This will provide temporary relief needed for the Post Office to continue to fulfil its internal and external financial obligations and continue to provide essential services to the communities it serves for the month of March 2025,” Rooplal said. 

He emphasised that the R150 million is not a payment or drawdown from the required R3.8 billion.

Rooplal further shed light on the status of the SAPO’s business rescue proceedings.

Positively, he said that since adopting the business rescue plan in December 2023, a total of 99.6% of creditor dividends have been paid. 

In addition, the Post Office continues to trade in the ordinary course of business, although Rooplal said the entity operates under serious austerity measures to preserve cash flow.

“Customers are still being serviced. However, there are currently delays in capital expenditure, both for expansion and to maintain the business,” he said.

The SAPO’s BRPs have submitted further details on their Post Office turnaround strategy to the DCDT and the Portfolio Committee. 

Rooplal explained that the SAPO’s BRPs are required to substantially implement their business rescue plan before they can conclude the business rescue proceedings. 

“The BRPs are eager to receive the funding indicated in the business rescue plan in order to satisfy the last obligation in the business rescue plan, which will allow them to file a notice of substantial implementation provided for in the Companies Act,” he said.