6,000 Post Office workers face axe as business rescue plan approved

Despite struggling for years with payments from the South African Post Office (Sapo), creditors owed millions have shown some faith in the state entity as they approved its business rescue plan and essentially saved it from closure.

Sapo business rescue practitioners (BRPs) Anoosh Rooplal and Juanito Damons confirmed the plan was approved on Thursday after 75% of creditors voted for the entity’s restructuring plan.

The approval comes two weeks after Rooplal and Damons published the plan, arguing the restructuring would benefit private companies more than the liquidation process. 

Rooplal was upbeat after approval, saying the plan could turn Sapo into a financially stable entity. “We believe with our continued involvement, hard work and detailed strategy, we can restructure the Post Office into a future-proofed business that can provide ‘communications inclusion’ for all South Africans,” he said.

Approval of the rescue plan gives the green light to retrenching 6,000 employees. Though Rooplal and Damons detailed their plan would be implemented in phases over two to five years, the plan indicated retrenchments would start soon.

“The retrenchment process will be initiated immediately after the adoption date in terms of which the BRPs anticipate approximately 6,000 employees will be retrenched,” the business rescue document read. 

Approval of the plan also means the entity will be working towards stopping South African Social Security Agency (Sassa) payouts. This will affect more than 5-million people receiving their grants at Sapo outlets. 

Rooplal and Damons said the grant payouts were not profitable and worsened state-owned Sapo's financial woes.

“The Sassa payments are made by Sapo at an estimated loss of more than R200m a year,” the business rescue plan document read. 

“The revenue generated by Sapo from Sassa grants was R798m for financial year 2022 and reduced to R318m for financial year 2023. Sassa fee revenue accounts for R48m for the first six months of financial year 2024.”   

The rescue plan proposed the payments be taken over by PostBank. 

The business rescuers were hopeful government would issue a bailout of R3.8bn to the entity to implement the restructuring plan.

“This BR plan hinges on a further allocation of R3.8bn to serve as a capital buffer to restore confidence in the South Africa Post Office. The BRPs anticipate the approval process for the allocation of the R3.8bn will be finalised during 2024,” the document read. 

Sapo plans to focus on: 

• diversified and expanded services through hybrid mail extensions;

• new motor licence disc solutions;

• increased property rental revenues or sales of owned property; and

• the creation of a digital hub for inclusive communications.

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