Former Post Office CEO Mark Barnes has penned an open letter to communications minister Khumbudzo Ntshavheni offering to buy a majority stake in the deeply troubled Post Office.
Barnes was CEO of the Post Office between 2015 and 2019, but resigned when he clashed with government over the strategy for Postbank and how it would be aligned with the Post Office.
In the letter, published in Business Day on Wednesday, Barnes said he would lead a consortium that would offer to purchase at least 60% (but no more than 75%) of the troubled postal service. A further 10% of the issued shares of the entity would be allocated directly to current and future employees.
The purchase price would be determined by taking the entity’s net asset value and subtracting the present value of forecast losses (to be determined by the auditor-general), Barnes said in the open letter.
The consortium would 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, redeemable, convertible debentures, which would either be repaid or converted into further equity in the Post Office “coincident with the planned listing and further permanent capital raising in the entity, in three years’ time”, Barnes wrote.
“Certain extraordinary, entrenched rights, required for the Post Office to operate as an organ of state, will remain intact and attach to the government shareholding for so long as government retains 25-40% of the Post Office.
“Postbank will remain an integral part of the Post Office, in whichever structure is considered most appropriate, and national treasury will continue to guarantee Postbank deposits until such time (if at all) as Postbank is able to successfully apply for a banking licence, regulated by the Prudential Authority within the South African Reserve Bank. This will only be pursued if Postbank wishes to provide loans, which is not the initial intention.”
Three-year term
Under the plan, Barnes will (again) be appointed as CEO of the Post Office “on commercial terms to be agreed for a period of three years”. During this time, he will “undertake to build a capable executive team to take over” and will be available for a further period of two years to serve as non-executive chairman, if required.
“It will not be possible to raise the required capital for this investment unless the proposed deal is agreed to by government contractually. 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.”
It is, however, unlikely that government will seriously entertain Barnes’s offer. The ANC has shown itself to be strongly averse to privatisation. Any sale of shares would also likely result in a strong pushback from the ANC’s allies in the tripartite alliance: the South African Communist Party and trade union federation Cosatu.
However, Barnes said in a preface to the open letter, published in Business Day, that the “only way to achieve both the commercial and developmental mandates with which the Post Office is charged is through a public-private partnership”. — (c) 2022 NewsCentral Media