Government plans ambitious approach to stave off SA Post Office final liquidation
Khumbudzo Ntshavheni, the minister in the Presidency, has confirmed that the government plans to challenge court orders that have placed the SA Post Office under provisional liquidation.
The government plans to mount a defence against the provisional liquidation of the SA Post Office — it wants to approach the high court to provide reasons why the state-owned enterprise (SOE) should not be wound up.
The future of the SA Post Office hangs in the balance after two real estate companies, which lease space to the SOE that is used for its postal branches, successfully secured court orders in recent weeks to have the company provisionally liquidated.
A provisional liquidation portends a process of winding up the SA Post Office, which involves selling its assets, and the proceeds from this sale would be used to pay liquidation expenses and the SOE’s creditors. Some of the SA Post Office’s assets include 641 buildings it owns that are collectively worth R2.8-billion.
The SA Post Office is essentially bankrupt, as it owes creditors at least R4.4-billion that it cannot afford to repay and it has recorded financial losses for the past 15 years.
Khumbudzo Ntshavheni, the minister in the Presidency, confirmed that the government plans to challenge court orders that have placed the SA Post Office under provisional liquidation.
Read more in Daily Maverick: SA Post Office in sight of its final resting place after being placed under provisional liquidation
“Businesses and creditors have been taking advantage of the Post Office’s financial situation. They want to take control of the Post Office from the government. The government will defend against the liquidation attempts,” Ntshavheni said during an interview with Daily Maverick on the sidelines of President Cyril Ramaphosa’s South Africa Investment Conference.
As the new minister in the Presidency, Ntshavheni’s job includes overseeing Ramaphosa’s efforts to reform SOEs and ensuring that their financial situation improves so that they don’t constantly rely on taxpayer-funded bailouts for survival.
Before she was appointed as the minister in the Presidency in March, Ntshavheni was the minister of communications and digital technologies, and through the department, she oversaw the financial and governance affairs of the SA Post Office.
Ntshavheni argued that the government cannot allow the SA Post Office to collapse because it offers “crucial” services, including distributing social grants to more than seven million beneficiaries every month.
Court-ordered liquidation orders
On 28 March, a real estate company called Withinshaw Properties was granted a provisional liquidation order by the high court in Pretoria against the SA Post Office for rental payments due on its premises in Wynberg, Cape Town. And on 9 February, the high court granted a provisional liquidation order to another real estate company called Bay City Trading 457, also for rental payments owed by the SA Post Office.
In both cases, the high court placed the SA Post Office under provisional and not final liquidation because it wants all affected parties to return to court and put forward their reasons why the court should not order the final liquidation of the SOE.
In the Withinshaw Properties provisional liquidation order, affected parties are set to return to court on 6 July to argue against a final liquidation order, while the matter involving Bay City Trading 457 will be heard on 1 June. This is when the government plans to argue and “defend” the SA Post Office against being liquidated, said Ntshavheni.
A final liquidation would result in the SA Post Office’s doors closing after operating for more than 30 years, and 12,000 workers losing their jobs. The government would also be forced to find another service provider to administer social grant payments.
The SA Post Office said it had started to pay the debt owed to some creditors, mainly that due to Bay City Trading 457.
“It is unfortunate that this particular provisional liquidation order relates to a debt that had since been settled,” the SOE said in a short media statement. The SA Post Office said it plans to approach the court to have it removed from provisional liquidation. The high court in Pretoria has appointed Anton Shaban and Hlamalane Jerry Musi as provisional liquidators.
Years of SA Post Office’s decline
The writing has been on the wall for a while regarding the SA Post Office’s decline. It reported a financial loss of R2.2-billion for the year to the end of March 2022. To cut costs, it recently embarked on a process to shed 3,000 jobs through a retrenchment process.
In a Daily Maverick podcast, former SA Post Office CEO Mark Barnes said the SOE’s bankruptcy “runs quite deep”. He proposed buying the SA Post Office from the government. Barnes would lead a consortium to raise capital to buy between 60% and 75% of the SA Post Office in a public-private partnership arrangement. Ten per cent of the total issued shares would be allocated directly to SA Post Office workers. The consortium would, in turn, invest capital equal to projected losses. But the government is not prepared to hand over the SA Post Office to private-sector players such as Barnes.
Ntshavheni has conceded that the SA Post Office faces serious operational and financial problems. She believes that it can turn around its financial situation by using the R2.4-billion taxpayer-funded bailout that Finance Minister Enoch Godongwana provided the SOE in the February Budget.
“The Post Office now has money to pay some of the debt. It not only has to pay the debt… but also invest in new businesses to generate revenue. If the SA Post Office just uses the money to pay off the debt, it will have a problem. But I don’t think there is reason to panic,” said Ntshavheni.
When Ntshavheni oversaw the governance affairs of the SA Post Office, she, the SOE’s executive management and the board approved a plan to overhaul the company’s operations. The plan involved the SA Post Office closing branches that are not profitable. The plan would also digitise and modernise the SA Post Office to diversify it away from its mail-delivery business to offer online services, and partner with e-commerce companies to deliver items such as chronic medication. Ntshavheni wants the SA Post Office to continue to operate and for this turnaround plan to be implemented. DM168
This story first appeared in our weekly Daily Maverick 168 newspaper, which is available countrywide for R25.