By Lehlohonolo Lehana.
Communications and Digital Technologies Acting Minister, Enoch Godongwana, has welcomed a high court decision to place the South African Post Office (SAPO) under supervision and in business rescue.
The High Court in Pretoria has ordered that the SA Post Office be immediately placed under business rescue to avoid the worst-case scenario of the state-owned enterprise (SOE) being forced to close its doors permanently.
The court ruled in favour of the government, which launched a court application for the SA Post Office to take the business rescue route instead of provisional liquidation.
The ruling, delivered on Monday, 10 July, means that the SA Post Office’s provisional liquidation proceedings, which were ongoing, will be immediately stopped. This paves the way for business rescue proceedings to begin.
Godongwana further noted the appointment of Anooshkumar Rooplal and Juanito Martin Damons as joint interim business rescue practitioners in respect of the business rescue proceedings subject to approval by the Registrar of Financial Services and ratification by the majority of SAPO’s creditors.
According to the Ministry of Communications and Digital Technologies, the decision of the court in support of the application brought by Minister Mondli Gungubele confirms that indeed SAPO is a strategic government asset that provides vital services throughout the country. This is especially in remote areas where SAPO is often the main link between residents and the outside world.
It added that it further uses its countrywide footprint to render such services as the distribution of social grants at its branches, distribution of medication to those in need and various national and international postal services etc.
The decision will give SAPO the much needed time and space to restructure its affairs under supervision and implement the turnaround plan to fundamentally change its business model into a solvent and viable business with broad revenue streams that leads on modern services.
“The challenge is on SAPO, the department and all stakeholders to live up to the commitments made in the application,” said Godongwana.
Business rescue, provided for by the Companies Act, is an attempt to rehabilitate financially distressed companies by restructuring their affairs. The objective is to enable a company to continue operating while being restructured, temporarily suspending payments to creditors and saving some jobs.
A provisional liquidation portends a process of winding up a company, which involves its assets being sold and the proceeds from this sale being used to pay liquidation expenses and its creditors. It is usually difficult for companies to be rehabilitated and resume trading at this juncture.
The SA Post Office owes creditors more than R5-billion that it cannot afford to pay back. Two companies that lease properties to the SA Post Office and are owed rental payments, were successful in their court applications to place the SOE under provisional liquidation.
The SA Post Office becomes the fourth SOE to take the business rescue route, following in the footsteps of SAA, Mango Airlines and SA Express.
Meanwhile Gungubele, is leading an Information and Communication Technologies industry delegation to the 2023 session of the International Telecommunication Union (ITU) Council High-Level Segment.
The session, which gets underway on Tuesday, 11 July, is being held in Geneva, Switzerland.
South Africa is a member state of the ITU Council.
The council meets on an annual basis in between plenipotentiary conferences to ensure that the union’s activities, policies, and strategies fully respond to the rapidly evolving telecommunications environment.