SA Post Office set to announce strategic partner as Treasury's R3.8bn funding falls through

Banele Ginindza

The South African Post Office (SAPO) is preparing to announce a strategic investment partner as it moves closer to exiting business rescue — a turnaround now proceeding without the R3.8 billion in funding initially promised by the National Treasury.

Briefing Parliament’s Portfolio Committee on Communications and Digital Technologies on Friday, the department’s Director-General Nonkqubela Jordan-Dyani confirmed that invitations for potential partners had been published to ensure transparency, even though several investors had already expressed strong interest.

"The reason we want to advertise is purely from a transparency perspective. There are so many partners who are absolutely keen to come on board to partner with SAPO. What we are afraid of, in terms of considering the unsolicited bids, would be if something else is also out there," Jordan-Dyani said.

"People have been knocking on the doors of SAPO continuously. Some information may have slipped through the cracks and we are hoping this transparent process is actually going to give it credibility. But more than anything, it will call forward the partners who are willing and eager to partner with the SAPO."

Jordan-Dyani said SAPO’s financial position had been severely affected by delays in State funding.

The R2.4bn ultimately allocated to support the business rescue process had originally been earmarked for the “SAPO of Tomorrow” strategy — a long-term modernisation and infrastructure plan. 

Business Rescue Practitioner (BRP) Anoosh Rooplal told MPs that the practitioners had already applied to the courts to formally exit business rescue.

However, he said part of the original rescue plan — including an additional 18 cents in the rand payment to major creditors such as the SA Revenue Service (Sars), medical aid schemes, and Postbank — would not proceed due to the shortfall in Treasury funding.

"We can only implement with the available funding. The 12 cents was duly paid. The 18 cents is part of that finding not received, so we have not paid it. The remaining 25% of the rescue plan has not been implemented," Rooplal said.

"With time lapsing, we've been engaging with National Treasury and of course the department. It's highly unlikely that we will receive that R3.8bn. As a result, that option to pay 18 cents means our plan moves from 75% to 100% because we have got certainty that we are not going to see the R3.8bn."

Outgoing SAPO CEO, Fathima Gany, who has remained in the role on a month-to-month basis since her term ended in September, said the required funds were intended not as a bailout but as an investment in SAPO’s turnaround strategy.

"What would have gone to part of the creditor compromise was the payment of 18 cents to the pension funds, medical aids and Sars. That comes to R500 million. There would be R1bn for the working capital investment because the business needs it," Gany said.

"The R2.4bn of that really goes into direct investments and that direct investment talks to enabling the business to meet service delivery when you think about motorbikes etc."

She added that the investment was meant to enable SAPO to improve service delivery and efficiency through key strategic enablers — including new logistics infrastructure and motorbike fleets.

"At the time the busines went to business rescue, these were the strategic enablers to the strategic execution of the plan, and one of the enablers, the R3.8bn funding did not materialise," Gany said.

BUSINESS REPORT