Good news about the SA Post Office

The acting CEO of the South African Post Office, Fathima Gany, has said that the failing state entity has achieved a positive net asset value of R1 billion. 

She noted this is the first time the state-owned entity has achieved this since 2012, thanks to its business rescue practitioners writing off R7.4 billion of its debt.

This was thanks to a compromised payment of 12 cents on the rand to its creditors. 

Imraan Subrathie, a member of the Portfolio Committee on Communications and Digital Technologies, praised the work of those involved in the Post Office’s overhaul.

“It was music to my ears when I heard the acting CEO, Fathima Gany, saying that the business can now pay its creditors in the ordinary course of activities,” he told Newzroom Afrika.

“It’s far from being out of the woods, as we have yet to recapitalise the business in terms of its modernisation — it still has a long road ahead of it.”

Subrathie said the Post Office’s Temporary Employee-Employer Relief Scheme application was also approved in April.

He says this will give the entity R381 million to pay its employees for the following six months, giving the business “room to breathe.”

Given the Post Office’s current financial position, Subrathie noted that the committee has suggested the exit of BRPs Anoosh Rooplal and Juanito Damons.

“An important part of our engagement was finding out whether the BRPs have passed on the necessary skills to the people who will remain at the Post Office,” he said.

“I think the feedback that we got was yes. The acting CEO, acting CFO, and the person in charge of operations provided comforting responses to the committee.”

However, he noted that the BRPs could only implement 75% of their plan, which means the Post Office still needs to pay its statutory creditors R500 million.

He said this is because the state-owned enterprise was not allocated the requested R3.8 billion needed to complete the business rescue plan.

Despite this, Gany told the committee that the R500 million debt will not dilute its R1 billion net asset value.

The business rescue plan

The Post Office was placed into business rescue in July 2023, and Rooplal and Damons were appointed to formulate a plan, which was adopted in December of that year.

As part of being placed into business rescue, the state-owned entity received a R2.4 billion injection from National Treasury, which it used to cover operations, settle debts, and pay salaries and severance packages.

In early September, the Post Office reported that 4,875 of its 11,083 staff had been retrenched. Of its 1,023 branches, only 113 were profitable, so 366 were closed. This left 657 branches nationwide.

Its debt to secured creditors was reduced by 88% to R842 million. By the end of July 2024, it had paid 98.6% of this.

Through deep compromises, Rooplal and Damons also reduced the entity’s liabilities from R8.7 billion upon entering business rescue to R440 million by the end of June last year.

The two BRPs previously warned that the Post Office would reach day zero on 30 October 2024 should it not receive the R3.8 billion.

Its day zero was the same day finance minister Enoch Gondongwana delivered his medium-term budget policy statement, where he vowed that the Post Office would not receive further bailouts.

“By the way, they told us D-day for the post office is today. But there’s no money in the adjustment as we speak,” Godongwana said in a press conference following the speech.

“We are hoping that the Department of Communications and Digital Technologies (DCDT) will find ways of reorganising and reprioritising their budget to deal with that question.”

Fortunately, the DCDT and the National Treasury gave the Post Office a R150 million lifeline in March this year.