Denel salaries at risk again in July
Denel is still in constant talks with banks, says group CEO Danie du Toit
Cash-strapped state arms manufacturer Denel has told employees that it remains at risk of not being able to pay salaries for July.
In June, the company said it could only pay 85% of salaries for June due to cash-flow problems. Soon after the public enterprise minister Pravin Gordhan announced that a lender had come to the arms manufacturer's assistance and full salaries were paid.
It then emerged that staff at Denel had been paid their salaries, but not their pension contributions.
Denel is one of several state-owned enterprises (SOEs) mired in allegations of corruption and state capture and has found itself in a deep financial crisis, needing a government guarantee to enable it to pay salaries and suppliers.
Denel has asked the government for a R2.8bn cash injection.
The company on Monday said group CEO Danie du Toit had indicated to employees that Denel was in constant talks with the banks to secure bridging finance to support it.
Du Toit has apologised for the stress and anxiety this has caused staff and their families. He said Denel noted the positive sentiments expressed by Gordhan and his deputy during the recent budget vote and the statements from finance minister Tito Mboweni regarding the possible recapitalisation of the company.
"We remain confident of government's continued support of Denel, and believe that we will receive the much-needed recapitalisation by the end of September 2019," Du Toit said.
"We furthermore are committed to and aligned with the shareholder expectation that we dispose of noncore assets on an urgent basis and establish strategic equity partners across the various divisions of Denel."
Despite this, Denel said it should be expected that the next few months would be "very tough".
Correction: July 22 2019
An earlier version of this article incorrectly reported that Denel group CEO Danie du Toit had said that they believe the company would have received the much-needed recapitalisation by the end of June 2019.