Denel says salaries will be paid by Friday
CEO Danie du Toit also confirms the state-owned arms manufacturer is working to find sustainable solutions to its liquidity crisis
Denel CEO Danie du Toit said on Wednesday that he is confident the company’s turnaround plan will ensure the long-term sustainability of the business.
Du Toit has confirmed that the state-owned arms manufacturer will pay full salaries to all Denel employees by Friday this week.
This follows a company statement on Tuesday morning that the company would be able to pay only 85% of salaries this month due to liquidity constraints. On Tuesday afternoon‚ public enterprises minister Pravin Gordhan announced in parliament that a lender had come to the aid of Denel and that full salaries will now be paid.
“There is no clearer example of the damaging effects of state capture than the financial strain and uncertainty the 3‚500 Denel employees and their families may face each month if the company’s liquidity problems continue‚” Gordhan said.
Du Toit assumed his position in January this year. The board‚ when it announced his appointment in December last year‚ said his role would be to help build on the cash-strapped entity’s turnaround strategy introduced in 2018.
Du Toit said the shareholder‚ the board and management are continually working to find sustainable solutions to the liquidity crisis facing Denel.
However, he said Denel was still facing challenges. “The government is aware that Denel is highly leveraged and in need of recapitalisation to rebuild the business.”
He said the company was pursuing business to strengthen market access and enable the development of new technology, adding that systems and processes were in place to strengthen governance‚ improve programme management‚ drive efficiencies, and grow revenues.
“I am confident that working together towards the long-term resolution of the current challenges we will ensure the long-term sustainability of our business‚” he said.
Speaking to Radio 702 on Tuesday‚ Du Toit said Denel’s previous management had signed loss-making contracts but the new management was trying to renegotiate those contracts. “Largely‚ our balance sheet is weak for the moment because of those onerous historical contracts.”