Collapsing Post Office needs cash fast

Johannesburg - The SA Post Office is weeks away from potential collapse unless it is able to raise the cash to pay its creditors, chief executive Mark Barnes said.He confirmed reports that the Post Office owed the Avis car rental company more than R50 million, after the firm turned to the high court in Pretoria to have its fleet of 4 000 vehicles returned.Its true, Barnes told Parliaments post and telecommunications oversight committee yesterday.There were also 25 post office branches that had been forced to close because the rent hadn't been paid or the post office was under summons for arrears, and seven where it was locked out.Barnes admitted many of the company's creditors had been extremely lenient, some not having been paid for a year, but some were now facing bankruptcy themselves as a result of the outstanding debt.He said Avis, for example, had first knocked on his door with a soft, embracing attitude but, despite his having written his first letter to the Treasury within eight hours of his appointment in November, in which he asked for help, he had been unable to give them anything.Three months later my speeches have no currency, Barnes said.Despite cost-cutting efforts the SA Post Office was still running at a loss of R125m a month. Things were so bad that all the printers had run out of ink and there were devastating pictures of overgrown post offices doing the rounds.The Treasury had been very supportive in extending the term of a government guarantee and the Post Office expected to receive a R650m equity injection on Monday, but had a total funding requirement of R3.5bn for the current financial year and the banks were being sticky about advancing money, Barnes said.We are engaged with the banks, but I can tell you this, that the good old days when you just arrived with a government guarantee and got the money are over.The banks regard that as irresponsible lending and they require the case to be made for the entity borrowing the money to be able to service and repay the loans.However, he was optimistic they would be persuaded.Even so, further equity injections of R1.35bn in each of the following two financial years would be needed to fix the hole so the ship could sail out of the harbour, Barnes said.I cannot overemphasise the fact that if we do not get capital very soon, this month, say, there is the potential danger of the collapse of the Post Office.But he said all of this was required to pay for past issues and, once this had been done, prospects would be much better.Wasteful and fraudulent expenditure, compounded by the crippling strike of 2014, had tipped Post Office into a net loss, resulting in it being unable to pay creditors, who then reduced or suspended their services, resulting in more customers deserting the post office.He presented what he called a very unambitious base case to return it to pre-strike profitability levels, turning its first profit in 2018.However, even implementing cost-cutting measures through voluntary severance packages would cost R370m, board chairman Simosezwe Lushaba told the committee, but would save R60m a month once completed.In the longer term, the fact that the Post Office had a footprint in every corner of the country would enable it to benefit from e-commerce as its sites became the collection point for goods ordered online, as was happening elsewhere.In India, its parcels business in India Post grew by 37 percent last year and 112 percent year-to-date, Barnes said.You don't go shop in India, because there's too much traffic. You order it and then it gets delivered.Political Bureau* Use IOLs Facebook and Twitter pages to comment on our stories. See links below.Get our free IOL newsletters - subscribe here...IOL News on FacebookIOL on Twitter href='http://www.iol.co.za/business/companies/collapsing-post-office-needs-cash-fast-2010546' - http://www.iol.co.za/business/companies/collapsing-post-office-needs-cash-fast-2010546 -