Former CEO offers to buy South Africa’s post office
Former South African Post Office chief executive Mark Barnes has offered to buy a portion of the embattled mail carrier in an attempt to help return it to its former glory.
In a letter published in BusinessDay, Barnes said he had tabled a proposal with the government in September 2021 which would see him lead a consortium to purchase at least 60%, but no more than 75%, of the Post Office.
“The purchase price will be the net asset value of the post office, less the present value of the forecast losses, as determined by the auditor-general,” he said.
“The consortium, over and above the purchase consideration, will inject a further capital sum into the post office, equal to the determined present value of agreed future losses to be funded, in the form of low-yielding (CPI, say) redeemable, convertible debentures, which will either be repaid or converted into further equity in the post office, coincident with the planned listing and further permanent capital raising in the post office, in three years’ time.”
Other parts of the proposed deal would see 10% of the total issued shares in the post office allocated directly to employees, with Barnes himself reappointed as chief executive for a period of three years to help oversee the transition.
Certain extraordinary, entrenched rights, required for the post office to operate as an organ of state, would remain intact and attach to the government shareholding for so long as government retains 25%-40% of the post office. The Postbank would also continue to form a core part of the Post Office until officially granted a banking licence by the National Treasury.
“It will not be possible to raise the required capital for this investment unless the proposed deal is agreed to by the government contractually,” he said.
“Once such an agreement is signed, I believe the required capital can be raised (locally and internationally) within three months of the investor proposal and the sale and subscription agreements being finalised.”
The Post Office has received several bailouts in recent years but continues to face operational difficulties.
In April 2021, the group said it had cut over 1,800 jobs as part of a turnaround plan, with the country’s auditor-general declaring that the organisation was ‘commercially insolvent’.
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