{"id":807408,"date":"2025-01-22T11:00:00","date_gmt":"2025-01-22T09:00:00","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=807408"},"modified":"2025-01-22T09:06:28","modified_gmt":"2025-01-22T07:06:28","slug":"five-well-known-south-african-companies-technically-insolvent","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/business\/807408\/five-well-known-south-african-companies-technically-insolvent\/","title":{"rendered":"Five well-known South African companies technically insolvent"},"content":{"rendered":"\n

Five of South Africa\u2019s best-known companies, MultiChoice, the SABC, Cell C, the SA Post Office, and Stefanutti Stocks, are technically insolvent.<\/p>\n\n\n\n

A company is technically insolvent when its liabilities outweigh its assets. In this situation, the company has negative equity.<\/p>\n\n\n\n

Negative equity means a company cannot settle all its liabilities if all its assets are liquidated, pointing to the need for drastic measures to improve the balance sheet.<\/p>\n\n\n\n

Although technical insolvency does not mean a company is bankrupt, it creates a situation where bankruptcy becomes more likely if left unchecked.<\/p>\n\n\n\n

A good example is Comair, which had operated the low-cost airline Kulula and British Airways in South Africa.<\/p>\n\n\n\n

The company faced numerous challenges before the pandemic, including operational inefficiencies, rising costs, and a competitive airline market.<\/p>\n\n\n\n

When the pandemic severely disrupted air travel and grounded flights in South Africa, it was too much for the airline.<\/p>\n\n\n\n

The company became technically insolvent and entered voluntary business rescue proceedings to address its insolvency.<\/p>\n\n\n\n

However, despite resuming operations in 2020, the South African Civil Aviation Authority\u2019s (SACAA\u2019s) decision to ground Kulula.com planes in March 2022 was the final blow.<\/p>\n\n\n\n

Despite the efforts of business rescue practitioners to save Comair and, therefore, Kulula, they were unsuccessful, and it filed for liquidation in June 2022.<\/p>\n\n\n\n

There are also many success stories, including Pick n Pay. Its results for the year that ended 25 February 2024 showed it was technically insolvent.<\/p>\n\n\n\n

The retailer\u2019s total assets were R46.51 billion, while its total liabilities were R46.69 billion. This means total liabilities exceed total assets by R183 million.<\/p>\n\n\n\n

To address the issue and strengthen the balance sheet, Pick n Pay unveiled a two-pronged approach to raise money to reduce debt.<\/p>\n\n\n\n

Pick n Pay launched a successful Rights Offer, raising R4 billion, and listed Boxer, through which it raised another R8.5 billion.<\/p>\n\n\n\n

This money significantly strengthened Pick n Pay\u2019s balance sheet, and the company is now in a healthy and solvent financial position.<\/p>\n\n\n\n

\n\n\n\n

MultiChoice<\/strong><\/h2>\n\n\n\n
\"\"<\/a><\/figure>\n\n\n\n

MultiChoice\u2019s financial statements for the year ended 31 March 2024 showed that it had become technically insolvent.<\/p>\n\n\n\n

MultiChoice\u2019s total assets declined from R47.6 billion to R43.9 billion, while liabilities increased to around R45 billion.<\/p>\n\n\n\n

This leaves MultiChoice with a negative equity of R1.068 billion, which means it is technically insolvent.<\/p>\n\n\n\n

In November 2024, Multichoice CEO Calvo Mawela said they were making good progress in addressing the technical insolvency.<\/p>\n\n\n\n

He said they expected to return to a positive net equity position by the end of November 2024, which will be reflected in their next annual results.<\/p>\n\n\n\n

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Cell C<\/strong><\/h2>\n\n\n\n
\"\"<\/a><\/figure>\n\n\n\n

Cell C\u2019s annual financial statements for the 2024 financial year revealed that it remained technically insolvent. Its liabilities of R17.3 billion exceeded its assets of R14.1 billion.<\/p>\n\n\n\n

However, the balance sheet improved over the last year. Its negative equity of R3.2 billion was much lower than the R4.0 billion.<\/p>\n\n\n\n

That shows that Cell C is progressing in cleaning up its balance sheet and is on a path to becoming solvent.<\/p>\n\n\n\n

After the recent recapitalization and with a new management team, there is a renewed focus on turning the struggling operator around.<\/p>\n\n\n\n

\n\n\n\n

South African Post Office<\/strong><\/h2>\n\n\n\n
\"\"<\/a><\/figure>\n\n\n\n

The South African Post Office\u2019s balance sheet deteriorated significantly over the last few years despite receiving billions in bailouts.<\/p>\n\n\n\n

Assets plunged from R16.07 billion to R4.5 billion in three years. Liabilities increased in the past five years, reaching R12.4 billion last year.<\/p>\n\n\n\n

This resulted in the Post Office becoming technically insolvent and unable to repay its liabilities if it were to liquidate all assets.<\/p>\n\n\n\n

Its business rescue practitioners (BRPs), Anoosh Rooplal and Juanito Damons, proposed a plan to significantly cut costs by reducing the Post Office\u2019s headcount and branch network.<\/p>\n\n\n\n

Despite the cost-cutting measures, the Post Office is on the brink of shutting down. The BRP warned it may have to close its doors without additional funding.<\/p>\n\n\n\n

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The SABC<\/strong><\/h2>\n\n\n\n
\"\"<\/a><\/figure>\n\n\n\n

The South African Broadcasting Corporation\u2019s (SABC\u2019s) latest annual report revealed that the state-owned enterprise is technically insolvent.<\/p>\n\n\n\n

\u201cThe impact of actuarial valuations on post-employment benefits since FY2020 has given rise to the negative equity reported in the Statement of Financial Position as of 31 March 2024,\u201d it said.<\/p>\n\n\n\n

The SABC\u2019s chief financial officer, Yolande van Biljon, said it remains a \u201cmaterial uncertainty\u201d whether they will be able to meet their obligations in the next twelve months.<\/p>\n\n\n\n

It will require the ongoing implementation of severe austerity measures at the state-owned enterprise.<\/p>\n\n\n\n

\n\n\n\n

Stefanutti Stocks<\/strong><\/h2>\n\n\n\n
\"\"<\/a><\/figure>\n\n\n\n

Stefanutti Stocks is one of South Africa\u2019s most prominent listed construction companies and focuses on infrastructure development projects.<\/p>\n\n\n\n

Its latest annual report showed that it remained technically insolvent, with its liabilities exceeding its assets by R52 million.<\/p>\n\n\n\n

The good news is that Stefanutti Stocks\u2019 negative equity has been improving, from R90 million in 2022 to R66 million in 2023 and R52 million in 2024.<\/p>\n\n\n\n

\n","protected":false},"excerpt":{"rendered":"

Five well-known South African companies are technically insolvent. Three have concrete plans to change their situation, while the other two are begging for more money.<\/p>\n","protected":false},"author":10,"featured_media":794415,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[9872],"tags":[42,1253,3707,667,15085],"class_list":["post-807408","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","tag-cell-c","tag-multichoice","tag-sa-post-office","tag-sabc","tag-stefanutti-stocks"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/807408","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=807408"}],"version-history":[{"count":2,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/807408\/revisions"}],"predecessor-version":[{"id":807419,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/807408\/revisions\/807419"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/794415"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=807408"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=807408"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=807408"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}