By Lehlohonolo Lehana.
The South African Post Office’s business rescue practitioners (BRP) have asked for a R3.8 billion bailout in their business rescue plan.
Anoosh Rooplal and Juanito Damons published their long-awaited business rescue plan on Thursday evening.
Roolplal says the Post Office’s financial sustainability is a critical concern that demands attention.
“The Post Offices’ costs have consistently exceeded 200% of its revenue since FY22. Employee costs accounted for 150% of revenue, with inadequate investment into IT systems, fleet management, mail processing centres, depots and the branch network,”
They say the reduction in employees will reduce the annual employee cost by approximately R1.2 billion. The BRPs want to cut 6 000 staff and around 420 branches.
Roolplal says the plan seeks to stabilise the company, restore it to solvency and enable the SA Post Office to operate sustainably without total reliance on the government.
“Furthermore, the Plan aims to provide a better outcome for creditors than would be the case in the event of liquidation of the Company.
Our approach in the Plan is to rationalise costs which are currently unsustainable and to assist in restructuring the Post office into an efficient and future-proofed business,” reads their business rescue plan.
The Practitioners say the Post Office has received a R2.4 billion recapitalisation fund from the Department of Communications and Digital Technology.
They have however required a further R3.8 billion allocation from the government to “support the turnaround strategy”.
“With the current allocation of the R2.4 billion, the Plan proposes a dividend award of 12 cents in the Rand, (circa R1 billion), to all pre-commencement Concurrent Creditors.
“The organisation however lacks skills and the leadership, management, and technical expertise across the business. This needs to be appropriately strengthened and developed, which is necessary to drive a culture change towards a high-performance organisation,” noted Rooplal.
Creditors are expected to convene on the 7 December and vote.
The plan will only be implemented if it gets 75% of this vote.
They have since appointed an independent evaluator tasked to value all 427 Post Office-owned properties for property development.
Although these properties experienced severe maintenance backlogs, many of these properties are in good locations, and could be of interest to property developers.
“SA Post Office’s revenue segments include postal services revenue, financial services revenue, and property rentals as the main sources of revenue as forecasted for FY24 onwards.