Denel might not pay July salaries on time
Denel group CEO Danie du Toit said through the statement the company was in 'constant engagements with the banks to secure bridging finance to support the company'.
JOHANNESBURG - Denel might not be able to pay its 3,500 employees at the end of July.
In a statement, the state-owned arms producer said it informed its employees on Monday that it was "at risk of not being in a position to pay salaries for the month of July on time".
Denel group CEO Danie du Toit said through the statement the company was in "constant engagements with the banks to secure bridging finance to support the company".
Denel also said its inability to pay was related to its liquidity problems at the company. It warned that the next few months would be touch and go.
"Whilst Denel is confident that we will soon be recapitalised, it should be expected that the next few months will be very tough. However, it is important to note that the implementation of the turnaround plan is in full steam," read the statement.
In June, Denel could not pay full salaries to its employees. It told workers they would only receive 85% of their salaries for June, and also paid pension fund contributions late. At the time, Du Toit and Public Enterprises Minister Pravin Gordhan said the cash flow problems were a result of state capture.
During the State of the Nation Address debate in Parliament, Gordhan said a lender came forward, allowing Denel to pay full salaries.
“Once again, I do apologise for the stress and anxiety caused to you and your families as a result of the current uncertainties. I thank you for remaining loyal to the company and for the personal sacrifices you are making for the company”, said du Toit through the statement.
“We have also noted the recent positive statements from the Minister of Finance regarding the possible recapitalisation of Denel; we remain confident of government’s continued support of Denel, and believe that we will receive the much-needed recapitalisation by end September 2019”, added Du Toit.
The company also committed to selling off some of its non-core assets urgently.
Whilst Denel was confident that it would soon be recapitalised, it should be expected that the next few months would be very tough. However, it was important to note that the implementation of the turnaround plan was in full steam.
SOLIDARITY THREATENS COURT ACTION
At the same time, Solidarity said if Denel failed to pay workers' salaries on time, it would challenge it in court.
“Not paying salaries on time must be totally unacceptable and we condemn it. The implications are immense and far-reaching and Solidarity is ready for the fight,” said Helgard Cronjé, the union’s sector coordinator for defence and aviation.
“The thought that Denel cannot guarantee salaries for July is completely unacceptable, to say the least. Recapitalisation alone will not solve Denel’s financial crisis. It is a short-term solution at best,” he added.