Post Office trying to get letters and parcels out of closed branches, as landlords lock the doors

As landlords locks the doors on post offices that have not paid their rent, the South African Post Office (Sapo) are trying to get letters and parcels out of closed branches.

The struggling state-owned company’s joint business rescue practitioners (BRPs) Anoosh Rooplal confirmed to The Citizen that a number of landlords had not been paid rentals for their properties used by post offices as branches or depots.

“Halfway House branch was one such branch. However, we needed to keep the Post Office operational, which has necessitated that we enter into negotiations with certain service suppliers including municipalities for electricity, landlords for rent and communications service providers for telephony and website use to name a few,” Rooplal said.

Rescue plan vote

Rooplal added that according to the business rescue plan, which was released last week, negotiations are ongoing with numerous essential service providers because the Post Office needs to continue operating while the plan is reviewed by creditors and put to a vote on 7 December 2023.

He said the BRPs are negotiating with the landlord at Halfway House to redeem all the parcels and letters, which will be redirected to another branch.

READ ALSO: ‘Bankrupt’ SA Post Office’s drive to cut costs

“Parcels are not sent to closed branches from the Mail depots and we are currently undertaking an exercise to move parcels should they still be in a closed branch,” he said.

Ongoing losses for 16 years

Moneyweb reported that Sapo was facing significant financial challenges. The business rescue plan for showed Sapo had accumulated losses of R19 billion in the past 16 years. Assets at the end of March were worth barely R4.4 billion.

“The largest chunk of the R9 billion is R4.6 billion owed to Postbank, which was officially separated from Sapo in September.
“Forget the landlords to which it owes a combined R400 million in unpaid rent. Forget also the group’s retirement fund as well as various medical schemes where contributions have simply not been paid,” said the publication.

It owes the Post Office Retirement Fund R1.22 billion, and Medipos Medical Scheme a further R693 million (plus R25 million to Sizwe Hosmed Medical Scheme, R18 million to Bonitas Medical Fund and R9 million to Discovery Health Medical Scheme).

READ ALSO: Post Office now the fourth SOE in business rescue

Cutting costs

News24 reported BRPs had proposed “right-sizing” the insolvent state-owned entity by cutting around 420 branches and axing 6 000 staff.

“Our approach in the plan is to rationalise costs which are currently unsustainable and to assist in restructuring the Post Office into an efficient and future-proofed business,” Rooplal told the publication.

The Post Office, which has already received R2.4 billion in new funding from the government, needed an additional R3.8 billion bailout as “investment capital” for repair and modernisation, said the BRPs.