Latest news with #BusinessRescuePlan
IOL News
22-07-2025
- Business
- IOL News
Funding shortfall jeopardises SA Post Office's business rescue plan
The South African Post Office's business rescue plan is in jeopardy after promised funds have failed to materialise. No further progress can be made in implementing the Business Rescue Plan without additional funding from the Department of Communications and Digital Technologies (DCDT), Messrs. Anoosh Rooplal and Juanito Damons, the business rescue practitioner (BRPs) of the SA Post Office (Sapo) said on Monday in an update. Because of this, the BRPs are consulting with their legal advisors regarding the company's potential exit from business rescue and the subsequent return of the company to its shareholder, the DCDT, along with a new appointed board. Sapo was placed under business rescue on July 10, 2023 to avoid liquidation. They said in an affidavit that they would award funding to the process, which would encompass funding of a first tranche of R2.4 billion (which was received and used for retrenchments packages) and then a second tranche of R3.8bn, which was going to be used for the infrastructure upgrade and digitilisation process. The BRPS were expecting to to get funding in March 2024 but nothing has materialised to finalise the plan and no funding was allocated to the Sapo per the medium-term budget speech. Of note, Communications and Digital Technologies Minister Solly Malatsi announced this week that Sapo will receive R1.8bn over the Medium-Term Expenditure Framework (MTEF), but this is not funding for the business rescue, it is a universal service obligation (USO). Due to this, a freeze has been implemented on all capital expenditure of Sapo and austerity measures were put in place last year. The BRPs said the freeze on capital expenditure included modernizing Sapo's office hardware infrastructure; building infrastructure upgrades; and IT upgrades. Only critical operational expenses are being incurred. The BRPs are continuing to engage with DCDT in relation to other possible alternatives in the interim. They said they were engaging with DCDT on the constituted Joint Sapo, DCDT and National Treasury Strategic Partners/Investment Task Team, however, the Joint Task Team is yet to convene. However, it got temporary relief of R150 million in funds. "The BRPs were informed at a meeting on 21 February 2025 of a possible virement (the process of transferring items from one financial account to another) of funds of R150m from the DCDT for working capital requirements. National Treasury has since approved the virement and the funds were received in March 2025," the BRPs said. "Although this may provide temporary relief for Sapo until the end of April 2025, the funds are not sufficient to substantially implement the Business Rescue Plan and remove the entity from Business Rescue." Additionally, R381m was allocated from the Temporary Employee-Employer Relief Scheme (TERS) in April 2025 to cover salary costs for a period of six months. A further R1.8bn has been allocated for the Post Office to fulfil its Universal Services Obligation (USO). The USO is a policy that ensures basic services, like telecommunications, are available toeveryone, regardless of their location or ability to pay. There is a shortfall to funds required. The BRPs said R3.8bn is still required to pay the remaining dividends to statutory creditors, provide enough working capital to the business, and to invest in certain infrastructure upgrades in order to sufficiently implement its turnaround strategy. Due to this funding uncertainty, the BRPs said they were aggressively focusing on collecting all outstanding debtors and increasing revenues where possible. Meanwhile, an extensive amount of work has gone into preparing a detailed strategy and financial model, and which are considered by the BRPs to be important supporting documents to the business rescue plan. The detailed strategy and financial model set out the turnaround plan and deals with the 'future proofing' component of the business rescue plan. These documents were presented to the DCDT, National Treasury and the Parliamentary Portfolio Committee on Communications and Digital Technologies. The BRPs said they have implemented the Business Rescue Plan to the extent possible despite the funding constraints. "The business rescue plan can only be fully implemented once we receive the funding or part of the funding that was committed by the government," they said. As regards creditor claims and payments, a total of 99.6% of creditor dividends of 12 cents amounting to R1 015bn have been paid on August 31, 2024. The remaining 0.4% of creditors is a combination of disputed claims and unverified landlord queries. Meanwhile, the top-up dividend of 18 cents to statutory and payroll creditors, including SA Revenue Service, the relevant medical aid schemes and the Post Office retirement fund remains outstanding and payment is conditional upon the receipt of the R3.8bn funding from the National Treasury unlessnew conditions are negotiated with these creditors. These creditors need to be paid. BUSINESS REPORT
IOL News
27-06-2025
- Business
- IOL News
Tongaat Hulett's journey to recovery: new leadership and challenges ahead
Gavin Dalgleish was appointed as CEO with effect from 1 June 2025, marking a significant step in the final phase of implementing the approved Business Rescue Plan and setting the stage for a seamless transition of Tongaat Hulett's business, assets, and people to Vision, the consortium acquiring the group. Image: Supplied Tawanda Karombo Tongaat Hulett, the beleaguered South African agro-processing firm, is poised to emerge from the shadow of its tumultuous past, thanks to new leadership and a significant restructuring initiative. Gavin Dalgleish, the company's new CEO, has expressed optimism about the path towards stability following a protracted period marked by scandals and heavy debt that once threatened its existence. Dalgleish was appointed as CEO with effect from 1 June 2025, marking a significant step in the final phase of implementing the approved Business Rescue Plan and setting the stage for a seamless transition of Tongaat Hulett's business, assets, and people to Vision, the consortium acquiring the group. In a recent interview, Dalgleish detailed the pivotal changes occurring at Tongaat Hulett, which has been under business rescue since an accounting scandal left it with debts exceeding R8 billion. Following the acquisition by the Vision Group Consortium, led by seasoned African investors Robert Gumede and Rutenhuro Moyo, the company is now focusing on debt recovery, having recently settled its obligations with creditors. 'We need to restore the faith of our employees, we need to restore the faith of our creditors and all our stakeholders that we're now functioning as a business again, and we're a good place and a reliable partner to do business with,' Dalgleish told Business Report in an interview on Thursday. Tongaat Hulett, however, will still be up against headwinds buffeting the South African and regional economic landscape. For example, upon exiting business rescue, the company will be up against rising imports of cheap sugar and currency volatility. For Dalgleish, the company's recovery will not be quick paced. In fact, he expects the rest of this year to be tougher for Tongaat Hulett. 'Like any other business, we're facing headwinds of a strengthening rand, reduced world market prices of sugar, and imports that flow from that. So for South Africa we're expecting this year to be a slightly tougher year,' he said. Tongaat and the Vision Group principals recently went on a roadshow to meet stakeholders in KwaZulu Natal, Zimbabwe and Mozambique. During those trips, the company explained to stakeholders the new approach to doing business. Dalgleish said together with the Vision principals, the company had sought to 'win back their (stakeholders) trust' and confidence as investors and as a business. Tongaat employs 2 400 people and 25 000 others across the extended value chain. Dalgleish said he felt overwhelmed by the responsibility he carries on behalf of the employees, value chain stakeholders and others linked to the company. He said sustaining jobs for those employed and impacted by the company was a top priority under his leadership. 'I'm excited by the challenge and the opportunity, as I said, I'm pleased with the the resilience of the people and the business that we found. And because of the social economic impact of the business, I have a great sense of responsibility.' After fully settling outstanding obligations to the company's lenders as of 9 May 2025, the finalisation of the asset transfer to Vision Group 'is expected imminently,' the company said at the beginning of this month, underscoring 'Tongaat Hulett's progress toward financial and operational' recovery. Last year, creditors in Tongaat voted in favour of a business rescue plan put forward by Gumede's investment consortium, Vision. This was after an accounting scandal rocked Tongaat Hulett, with the company tail-spinning into a debt of R8.2 billion, prompting shareholders to adopt an amended business rescue plan. Tongaat Hulett is envisioned to continue playing critical roles in the economic fabric of Southern Africa under its new ownership. In South Africa, the business 'remains a cornerstone of the sugar industry, sourcing cane from 15 000 small-scale growers – thereby sustaining local farming communities, and underpinning numerous rural economies,' especially in the KwaZulu-Natal province. In Zimbabwe, Tongaat Hulett owns two operating businesses, Triangle and separately listed Hippo Valley Estates. Triangle said recently that it was facing operational challenges that had forced it to retrench employees after cost cutting measures failed to yield a respite. BUSINESS REPORT
