Highly indebted Denel hopes to have a rescue plan by the end of the month
State-owned arms manufacturer Denel has a multi-billion rand debt problem and no plan as yet on how to tackle it.
Denel has R2.34bn of bonds maturing in September, a tough ask for a company in the midst of a liquidity crisis. The company, beset by allegations of mismanagement and corruption, required a government guarantee of R850m in December to raise money to pay salaries and its suppliers.
The company said it was in talks with the National Treasury and hoped to have a plan in place by the end of June to deal with its debt obligations. They would also "attempt to develop long-term solutions to the current liquidity challenges", Vuyelwa Qinga, group executive for communication and public affairs, said in an e-mailed response to questions.
Denel paid about R30m in coupons due on two of the bonds on Monday and would meet other interest payments still outstanding, Qinga said.
Most of Denel’s debt is held by the Public Investment Corporation (PIC), which oversees about R2-trillion of state employees’ retirement savings. Those benefits are guaranteed by the government and in the case of lower than projected investment returns, taxpayers ultimately have to fund the shortfall.
Public Enterprises Minister Pravin Gordhan appointed a new board for Denel in April.