SAPO was placed under provisional liquidation after two creditors approached the Pretoria High Court earlier this year.
Cape Town - Communications and Digital Technologies Minister Mondli Gungubele said the government has opted to pursue business rescue in order to save the cash-strapped SA Post Office (SAPO).
The SAPO was placed under provisional liquidation after two creditors approached the Pretoria High Court earlier this year.
The matter returned to court on June 1, to determine whether the order should be made final, only to be postponed until later this year.
However, the government instituted a business rescue application on May 31, to be heard on July 4.
This happened as about 12 lawyers for other creditors joined in as interested parties in the provisional liquidation on June 1.
Briefing the communications and digital technologies portfolio committee on Tuesday, Gungubele said SAPO’s challenges were long, with its troubles having worsened in the 2014/15 financial year during a strike, and the absorption of no less than 8 000 temporary workers.
“The challenge is more about the core structure SAPO is struggling to deal with. Leadership is part of that as an essential element,” he said.
Gungubele said staff costs at the entity were higher than any other costs.
“The totality of the structure became unaffordable to the extent that the liabilities were beyond R8 billion taking care of revenue of about R2 billion,” he said, adding that creditors became worried about loans being serviced.
“That is why some went to court and the court would naturally grant a provisional liquidation order,” he said.
Gungubele said they had used the period between the granting of the provisional liquidation order and the return date, to explore all options available to SAPO.
“It became very clear, what is unthinkable was to allow SAPO to go under.
“Unfortunately, there seems to be convergence across the entire society that the worst thing you can allow is to allow SAPO to go under, taking into account (that) no less than 700 SMMEs have a relationship with SAPO and those SMMEs were giving work opportunities to a significant number of families.”
He added that SAPO needed infrastructure for the payment of no less than 6.9 million social grants, and noted that it was a debtor to no less than 100 creditors, including pension funds and SARS.
“All those things require a viable SAPO that can actually serve those objectives.”
Gungubele said they had worked with a senior counsel to find a viable option to save SAPO.
“In that process we have been able, having looked at all the options, to agree that business rescue is the key.
“The fiscus of the country is of such a nature that there is no R8 billion freely available to be paid now.
“You need an option that will help SAPO to be re-organised to become a viable institution.”
Gungubele said the issue was how to finance the creditors’ requirements, keep SAPO operational while under business rescue if the court granted it, and whether there was a business turnaround that was convincing to the court that SAPO could still survive.
“That work has been done. Cabinet did agree on a business rescue approach,” he said explaining why the business rescue application was launched before allowing director-general Nonkqubela Jordan-Dyan to make a detailed presentation.
Cape Times
Related Topics: