Denel confident it will pay salaries
The cash-strapped stateowned arms manufacturer Denel says that although it was still finalising a plan to tackle its liquidity challenges, it would pay salaries and suppliers in January.
Cash-strapped, state-owned arms manufacturer Denel says that although it is still finalising a plan to tackle its liquidity challenges, it will pay salaries and suppliers in January.
With the deadline for the company’s payroll looming, staff and service providers are concerned that salaries and bills will not be paid. Denel received an emergency government loan guarantee of R580m in December to pay its 4,000 employees and suppliers.
However, it is unclear how the company will raise funds to fulfil its obligations.
The Treasury said it had provided the guarantee to Denel to resolve its “immediate funding crisis”. The parastatal still needed to put a credible strategy in place, it said.
Denel already has a government guarantee on its debt of R1.85bn.
“The provision of the government guarantee is a short-term solution, and Denel still has to put in place a credible strategy, which must include a long-term solution with restructuring initiatives and an implementation plan to ensure Denel is financially sustainable,” the Treasury said on Tuesday.
The United Association of SA’s sector manager, Willie van Eeden, told Business Day he had requested a meeting with the company’s management to hear how it planned to pay workers and suppliers. He said the union was in the dark about where Denel would get the funds to pay salaries.
“We will ask the question about the payment of salaries so as not to have the same scenario as at the end of 2017. I’ve been getting calls from some of the employees who said if some of the suppliers were paid in December, how can we be sure that salaries will be paid at the end of January,” he said.
Although Denel did not answer questions, spokeswoman Pamela Malinda told Business Day that it would pay salaries and suppliers “within agreed terms”.
In December, Public Enterprises Minister Lynne Brown said in a written reply to Parliament that the government had not ruled out selling a stake in Denel. However, the minister has yet to act on warnings by lenders that unless the government replaced Denel’s board, it would have its credit facilities withdrawn.
This week, City Press reported that the arms manufacturer allegedly cancelled an R80m tender awarded to a Portuguese “company” that did not exist, following threats of court action by a losing bidder. The department referred queries to Denel.
WE WILL ASK ABOUT THE PAYMENT OF SALARIES SO AS NOT TO HAVE THE SAME SCENARIO AS AT THE END OF 2017