‘Business rescue will give Post Office time to turn its fortunes around,’ says government

Government is looking to turn around the South African Post Office after the institution was saved from liquidation.

On Monday, the Pretoria High Court granted the government’s application to place the Post Office in business rescue with immediate effect, thus, avoiding liquidation.

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Judge Elmarie van der Schyff, in the court judgment, confirmed the appointment of Anoosh Rooplal and Juanito Martins Damons as joint interim rescue practitioners.

The Post Office had been placed in provisional liquidation this year due to its failure to pay rent and other liabilities.

The embattled state-owned entity has been insolvent for some time, with a reported debt of around R9.4 billion.

Turnaround plan

In a statement, Finance Minister Enoch Godongwana, on behalf of Communications and Digital Technologies Minister Mondli Gungubele, who is currently in Switzerland, welcomed the judgment and the appointment of the business rescue practitioners.

Rooplal and Damons’ appointment was pending approval by the registrar of Financial Services and ratification by the majority of Post Office’s creditors.

“The decision of the court in support of the application brought by Minister Mondli Gungubele confirms that indeed Post Office is a strategic government asset that provides vital services throughout the country, especially in remote areas where Post Office is often the main link between residents and the outside world,” the Government Communications Information System (GCIS) said on Tuesday.

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“It further uses its countrywide footprint to render such services as the distribution of social grants at its branches; distribution of medication to those in need, various national and international postal services, etc.”

The department highlighted that the business rescue process assist the Post Office with its turnaround plan since government has agreed to inject R2.4 billion in funding, although more bailouts could be provided in the future.

“This decision will give the Post Office the much needed time and space to restructure its affairs under supervision and implement the turnaround plan to fundamentally change its business model into a solvent and viable business with broad revenue streams that leads on modern services.”

Revenue reduced

Over the years, the Post Office has faced myriad challenges, which have threatened the sustainability of the entity.

Technological advancements have displaced the need for physical letters.

As a result, letter volumes are declining and in tandem, revenue reduced from R3.4 billion in 2015 to R2.6 billion in 2022.

According to the 2022 annual report, fewer than a quarter of Post Office’s 1 266 branches were profitable.

It was previously reported that the entity plans to retrench 6 000 jobs, leaving just under 5 000 employed by the postal services company.

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