Nashua pulls plug on post office printers

Admire Moyo
By Admire Moyo, ITWeb's news editor.
Johannesburg, 06 Dec 2023
The South African Post Office was outsourcing printers from Nashua.
The South African Post Office was outsourcing printers from Nashua.

Office automation and print service provider Nashua recently switched off the printers it was outsourcing to the insolvent South African Post Office (SAPO), due to a R14.1 million debt.

So said Alan Dickson, CEO of Reunert Group, in an interview with ITWeb after the company announced its interim financial results for the six months ended 30 September. Nashua is a subsidiary of Reunert.

According to Dickson, the ailing state-owned enterprise (SOE) outsourced managed printing devices from Nashua, using them to print documents, such as licence discs, among others.

However, the company, which has since written down the SAPO debt, pulled the plug on SAPO’s printers after the SOE was placed in business rescue.

Reunert’s financial results show the performance of its ICT segment was under par and the company cites the SAPO contract as one of the reasons for the lacklustre showing.

It explains the financial performance of the ICT segment was negatively affected by record levels of load-shedding, which reduced the minutes sold by the Electronic Communications Network by 17%; the sale of R250 million of the Quince loan book to fund the Etion Create acquisition; and SAPO being placed in business rescue − all of which resulted in a reduced segment operating profit.

Sinking SAPO

The state-owned SAPO is battling dire financial straits, with liabilities totalling approximately R12.5 billion as at 31 July.

Furthermore, the embattled entity is faced with a waning branch network due to lack of rent payment to landlords, IT issues and forced manual operations because of outstanding electricity bills.

The business rescue plan aims to stabilise the company, restore it to solvency and enable it to operate sustainably as a going concern without total reliance on government funding in the future.

The plan seeks to provide a better outcome for creditors than would be the case in the event of liquidation.

The SAPO business rescue practitioners recently said they are looking to cut as many as 6 000 jobs at the post office in a bid to modernise the troubled SOE.

“The South African Post Office has been a big customer and government placed them in business rescue. So, we had a once-off credit loss as a result of that,” said Dickson.

Prior to the business rescue, he said, Nashua had continued supporting the SAPO even though it was under financial distress.

Reunert Group CEO Alan Dickson.
Reunert Group CEO Alan Dickson.

“SAPO had been in a financial situation for some time. If you think about that, if you go to a post office to renew your licence, that gets printed for you on a Nashua machine.

“We continued assisting them and the situation got quite bad about two years ago and we started working down the debt with them because if we had turned off our machines, they were going to be in a much worse situation because they couldn’t deliver their services to customers.

“We were trying to work with them with the hope that they would pay. However, out of the blue, government put SAPO under business rescue.

“Basically, the business rescue plan says four cents in a rand is what the current creditors will get. So, effectively, we had to write off the entire outstanding debt,” Dickson explained.

After writing off the debt, Dickson believes SAPO should not have a negative impact on Reunert’s ICT division going forward.

The post office has a list of creditors numbering 1 100, the biggest being Postbank, which is owed R4.6 billion. It also owes the South African Revenue Service over R697 million, reportedly in pay-as-you-earn taxes.

The business rescue practitioners had not responded to ITWeb’s queries by the time of publication.

Meanwhile, as the SOE’s woes continue, government believes the situation can still be salvaged.

Communications minister Mondli Gungubele recently said the post office remains a valuable part of the country’s critical infrastructure, despite recent financial challenges.

As a result, the minister reassured the global community that “South Africa remains committed to the success of [the] post office”.

Gungubele believes the ailing entity can be revitalised to become a key e-commerce player in the country. He also urged the protection of as many jobs as possible, as the ailing entity undergoes retrenchments as part of a business rescue plan.