‘Day Zero’: SA Post Office warns of liquidation and job losses

The South African Post Office (Sapo) said “Day Zero” could arrive as early as October when its cash reserves are expected to run out, putting it at risk of liquidation.

The state-owned entity (SOE) briefed Parliament’s communications and digital technologies portfolio committee on Tuesday about the business rescue process and its struggling financial health.

‘Day Zero’

Sapo said that unless it receives a R3.8 billion financial injection, it will run out of funds, and its business rescue practitioners (BRPs) may be forced to liquidate the entity.

The Post Office was on the brink of liquidation last year before it was ultimately placed under business rescue.

Acting CEO Fatima Gani warned that the consequences of liquidation would be dire for the Post Office.

Gani explained that “the estate” would be placed in the hands of the Master of the High Court, who would then appoint a liquidator to wind up the estate.

“All jobs will be lost, business operations will cease, save only for those operations necessary to wind up the company. Furthermore, all assets will be sold at forced sale value; any proceeds will be divided amongst creditors.”

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“To aggravate matters, the provisional liquidation order (issued prior to Sapo being placed in business rescue) remains in place. The attorneys for the provisional liquidators have been successful in extending the rule nisi on three separate occasions. We have a difference of opinion and have applied for a special motion court to fully ventilate our position. The matter is set down for 18 November 2024,” Gani said.

What next?

However, according to the department, there are “green shoots” as the the Post Office is sitting with a “positive” net asset value.

The committee said it was not satisfied with the Post Office’s report, and the fact that the issue of “Day Zero” was raised, just a month before it happened.

A follow-up meeting is now expected with the committee before the October cut-off.

In May, the business rescue practitioners proposed action to reduce the annual employee cost by about R1.2 billion. They developed a plan to right-size the business by retrenching around 6,000 of the 11,083 staff members.

The Sapo plan previously estimated that it would require about R6.2 billion to implement its plans and place the entity on better footing.

In February last year, National Treasury announced an allocation of R2.4 billion for Sapo in the February budget.

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