The South African Post Office (SAPO) is insolvent. Its debt obligations have increased to R12.5 billion, according to SAPO’s business rescue practitioners.
SAPO must improve revenue and implement an effective and efficient cost structure if it is to become solvent.
The SAPO asset base is dwarfed by its total liabilities of approximately R12.5 billion.
Anoosh Rooplal, one of the business rescue practitioners, said that addressing the decline in SAPO’s revenue, reducing costs, effecting key structural changes in the business model, and identifying additional sources of income are critical.
‘The success of the SAPO Business Rescue is predicated on arresting the cash flow bleed whilst also allocating capital to facilitate the company being able to service clients effectively’, he added.
The practitioners identified several disciplinary cases relating to misconduct that had been stalled before they got involved.
Some of these cases are high-profile and related to senior management. The practitioners hope to finalise them ‘in the coming weeks’.
SAPO has failed to pay staff medical aid and pension fund contributions despite deducting them from wages. The business rescue practitioners have committed to paying over contributions, and they have given employees the option to choose an alternative medical aid.
Due to its financial situation, the Post Office has been forced to shut down many branches across the country as it has been unable to pay rent or utilities.
Some branches have been operating manually due to electricity shutdowns resulting from the non-payment of electricity accounts.