DENEL SELLS R50 MILLION TWO-YEAR FLOATING NOTES

STRUGGLING state weapons-maker Denel, which recently asked the government to be recapitalised, is also tapping the debt market.

The company sold R50 million of two-year floating-rate notes yesterday, according to a JSE statement. The notes were listed at 250 basis points above the 6.833 percent Jibar (Johannesburg Interbank Average Rate) on August 16. Denel this year applied for funding from the National Treasury Contingency Reserve, because it was suffering from serious shortages of liquidity and required recapitalisation to be kept going. In July, it even warned that it may not be able to pay staff salaries, although these were eventually paid. Finance Minister Tito Mboweni said at the end of July that Denel, and other stateowned entities, would be recapitalised with billions of rands in extra funding through the government’s contingency reserve account, but this would come with conditions. Denel had asked the government for a R2.8bn cash injection to help it emerge from a financial crisis and secure export deals. The bailout would help Denel win new contracts over the next two years, Denel claimed. Public Enterprise Minister Pravin Gordhan said in Parliament, according to media reports, that Denel was exploring viable new revenue streams and new technologies. A turnaround plan, which had been approved by the Denel board in February, was being implemented. The plan calls for the disposal of non-core assets and entering into equity partnerships for the different divisions of the group.

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