Cash-strapped Denel expects tough few months as it awaits bailout

On Monday, the military and aerospace equipment producing company told workers that it might not be able to pay their salaries on time this month.

Picture: @DenelSOC/Twitter

JOHANNESBURG – State-owned company Denel said that the next few months would be tough as it awaited a government bailout.

On Monday, the military and aerospace equipment producing company told workers that it might not be able to pay their salaries on time this month.

The company cited liquidity challenges but said it was in talks with banks to secure bridging finance.

It's believed that Denel would require a R2.8 billion cash injection in order to obtain potential export deals worth R30 billion which could be enough to see the company back in business.

Denel said it remained confident of receiving government support and believed that it would obtain the much-needed recapitalisation by the end of September.

Union Solidarity, however, says workers would suffer in the meantime.

Sector coordinator Helgard Cronje said: “At the end of the day, the individuals seem to be the ones that are paying for the government’s inability to properly run these companies.”

The company's revenue fell from R88.4 billion in the 2016/2017 financial year to just over R8 billion in the 2017/2018 period.

Public Enterprises Minister Pravin Gordhan has described the state of the company as a clear example of the effects of state capture.