Is it game over for the Post Office?

Despite a R2.4-billion February bailout from national treasury, the Post Office is struggling to keep its head above water.

The Post Office was placed under provisional liquidation on 9 February following a successful court application by a creditor owed money for rent. Property company Bay City Trading 475 applied for a large amount of unpaid rent and two provisional liquidators were appointed by the high court in Pretoria on 23 March.

According to Business Day (paywall), the provisional liquidators are Anton Shaban and Hlamalane Musi. Their job is to try to establish the company’s debts and oversee the sale of assets that can be salvaged in order to pay creditors.

This is not the first time the Post Office had been placed under provisional liquidation – it has lost money every year since 2013 and branches all over the country have been closed in an effort to cut costs. Initially, a plan to cut 6 000 jobs was announced. This was later reduced, but in its most recent financial statements – for the financial year to end-March 2022 – it owed more than R4.4-billion to creditors.

Finance minister Enoch Godongwana allocated the Post Office R2.4-billion in bailouts in this year’s budget and last year said the entity’s expenditure was expected to decrease at an average annual rate of 4.8%, from R7-billion in 2020/2021 to R6-billion in 2024/2025. “This is mainly due to a decrease in spending on compensation of employees, from R4-billion in 2021/2022 to R2.7-billion in 2024/2025, due to the staff optimisation project, which will see the number of employees decrease from 16 275 to a projected 10 254 in 2024/2025.”

‘Trade as normal’

Suzie Khumalo, a Post Office spokeswoman, said a statement would be issued this week and wouldn’t be drawn further. However, she was quoted by TimesLive as saying that the Post Office “would continue to trade as normal”.

The Post Office’s response to Business Day suggests that it does not intend to allow a full liquidation to happen. “We have been dealing with such matters for a while now. We have been able to resolve matters between the parties. We have no reason to believe that this one would be any different.”

But Mark Barnes, the former Post Office CEO who resigned from his position after three years over differences relating to the structure of the parastatal, said it is his understanding that it would not be possible “to trade as normal” under a provisional liquidation.

Barnes told TechCentral that legislation ensures that one creditor is not favoured over another, and that there is soon “likely to be a queue of creditors.” He also said that the provisional liquidation is a “binary issue taking place at the highest level” and what was needed was support from national treasury.

The case returns to court on 1 June and if no one has approached the court by then, the liquidation is likely to be made final.

TechCentral was not able to reach the department of communications & digital technologies for comment despite repeated attempts.  – © 2023 NewsCentral Media

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