Post Office nears raising R2.7bn in capital

2016-04-28 15:29 - Gareth van Zyl, Fin24
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Mark Barnes is the new chief executive of the South African Post Office. (Image courtesy of Finweek)

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Johannesburg - The embattled South African Post Office (Sapo) is near to raising R2.7bn in capital from the likes of banks, says chief executive officer Mark Barnes.

Sapo has suffered years of maladministration with the state-owned entity recording a R1.5bn loss in 2015.

A months-long 2014 strike also crippled postal services while Public Protector Thuli Madonsela earlier this year found Sapo’s 2010 acquisition of a R161m ten-year office lease to be irregular.

But government in January this year hired Mark Barnes - the former CEO of private equity firm Brait - as Sapo’s new chief executive officer in a bid to help turnaround the flagging company.

And after government gave Sapo a R650m cash injection earlier this year, Barnes told Fin24 that Sapo is nearing raising R2.7bn from banks.

"We've got a capital injection from Treasury - that is the first stage,” Barnes told Fin24.

“And there's another R2.7bn of which we've got about 65% already.

"So, treasury stood up to the plate for R2.7bn of guarantees. We're out there raising capital again since we've got like R1.8bn raised already,” Barnes said.

Barnes’ comments about Sapo’s capital raising efforts came amid questions from Fin24 about looming strike action.

READ: Union threatens nationwide Post Office strike

The Communication Workers Union (CWU) has threatened to launch a two-day strike on May 5-6 to demand annual pay increases. CWU also wants casual Sapo workers to become full-time employees with benefits.

On Thursday, Barnes said he hadn’t received notification from CWU about a strike, but the Sapo CEO urged workers against taking their grievances to the street, especially as more capital funding is on its way.

“We're six weeks away from getting the money,” Barnes told Fin24.

"We do have money coming and part of that money will be used to settle the past in respect of pay obligations and ... to structure a forward deal, which we will sign up to, and that will include certain increases in the future.

"So often the race is won in the last few yards, or lost. And that's my message to the unions: We are in the last few yards here,” said Barnes.

In Parliament earlier this year, Barnes also said that Sapo could be profitable by 2018. Barnes told Fin24 on Thursday that he’s still confident that Sapo could achieve this feat.

"I'm absolutely confident. I've become more and more confident everyday about the forward strategy,” Barnes told Fin24.

"We're getting approaches from potential partners and service providers that are overwhelming.

“I can tell you we make our first little payment to creditors tomorrow, of some of the money that's owed to them. They've all been very supportive,” said Barnes.

Read more about: post office  |  sapo  |  mark barnes