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The SA Post Office (SAPO) has been saved from liquidation after an application to the high court by the minister of communications and digital technologies to halt liquidation proceedings and rather put the ailing enterprise into business rescue was granted.
This means taxpayers are likely to be on the hook for billions more.
High Court Judge Elmarie van der Schyff says in her ruling: “An aspect I initially found somewhat disturbing is government’s unwavering stance, as communicated through the minister’s affidavits, that it is only willing to provide capital if SAPO is placed in business rescue.
“While emphasising the dire effect that final liquidation will, inter alia, have on the nation’s international responsibilities and the role that SAPO plays in the country’s socio-economic structure, it seems as if the government wants to force the court’s decision and the outcome of this application by bluntly stating that the R2.4 billion that has already been earmarked to fund SAPO’s turnaround, will now only be available for business rescue proceedings.”
In addition, the court noted that SAPO is totally reliant on government funding as it is not allowed to raise financing from any other source without government approval.
“SAPO is not empowered to borrow money without the prior written approval of the minister, granted after consultation with the minister of finance, and [is] thus unable to obtain capital from another source
“The minister did not deem it necessary to engage with the provisional liquidators to discuss the feasibility of [another] compromise proposal.
“The compromise proposal, developed on the assumption that the earmarked R2.4 billion would be available, envisages SAPO exiting provisional liquidation intact. After that, the provisional liquidators submitted, the government could pursue an operational restructuring of SAPO, using the additional R3.8 billion, which the government is allegedly willing to invest in SAPO,” according to the judgment.
“This begged the question as to whether it would not be appropriate and in the public interest to postpone the business rescue application and request the minister to purposively engage with the provisional liquidators, and file a supplementary affidavit, where after the application could be finally considered.”
The judge says submissions by the minister noted the minister’s concern regarding SAPO’s future viability if a financial bailout is to be provided without commitment to an operational restructuring – by independent business rescue practitioners.
“The minister’s counsel emphasised that any solution that solely focuses on a compromise with SAPO’s creditors, without addressing SAPO’s ability to increase its service offering and decrease costs, is not viable as it does not resolve the structural problems SAPO faces,” according to Van der Schyff’s ruling.
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