Treasury warns Denel faces risk of bankruptcy protection

Denel has struggled to pay salaries this year amid a liquidity crisis aggravated by the coronavirus crisis.

FILE: A Denel stand at an arms convention. Picture: @denelsoc/Facebook

JOHANNESBURG - State-owned arms firm Denel faces the risk of being placed under a local form of bankruptcy protection called business rescue or even liquidation, National Treasury said on Tuesday.

Denel, which makes military equipment for the South African National Defence Force (SANDF) and clients around the world, has struggled to pay salaries this year amid a liquidity crisis aggravated by the coronavirus crisis.

Treasury said in a presentation to parliament that Denel was forecast to have had a negative equity position of R3.3 billion ($196.7 million) as of March 2020.

Download the EWN app to your iOS or Android device.