Denel’s reliance on foreign markets is leading to a liquidity crisis
State-owned arms manufacturer Denel is facing problems of liquidity along with the company’s over-reliance on foreign markets, Public Enterprises Minister Lynne Brown told MPs on Wednesday. Ensuring a sustainable funding solution for the business was critical as the company relied on client advance payments and short-term paper to finance its working capital requirements. This strategy was not sustainable and exposed Denel to regular cash flow shocks, said Brown in a briefing to Parliament’s public enterprises committee." A long-term recapitalisation plan needs to be found to ensure liquidity and sustainability."
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