JSE suspends Denel bonds trading


Embattled Denel finds itself not able to trade its bonds on the Johannesburg Stock Exchange (JSE), another blow to the beleaguered State-owned company (SOC) in the wake of the release of the second part of the Zondo Commission of Inquiry report into State Capture.

SENS (Stock Exchange News Service) of the Johannesburg bourse has it the Centurion headquartered defence and technology conglomerate failed to comply with set down debt listings requirements by not submitting annual financial statements within a stipulated timeframe. To meet this requirement for State-owned entities (SOEs) – and ensure trade in Denel bonds can continue – financial year-end statements must be published and submitted within seven months of financial year-end.

“The requirements further stipulate that one month after the end of the seven-month period the JSE will consider suspension of the Issuer’s (in this instance, Denel) securities. Debt security holders are referred to the JSE’s announcement dated 3 November 2021 in which it was confirmed the Issuers listing of debt securities was under threat of suspension.

“The Issuer announced on 29 October 2021 its board of directors made the decision to defer publication of the annual financial statements and that will be combined with publication of the 2022 financial information. Considering the aforementioned and after due process and consideration, the JSE made the decision to suspend the Issuer’s debt securities with immediate effect,” according to the SENS statement.

The non-appearance of the financials was highlighted in December by Democratic Alliance (DA) shadow deputy public enterprises minister Michele Clarke. She said it was “yet another indication Denel simply doesn’t have either the financial or operational capacity to meet deadlines of any sort”.

Last October, Public Enterprises Minister Pravin Gordhan told Parliament Denel was “experiencing serious liquidity challenges”. Denel, he said in an official announcements, tablings and committee report (ATCs), “is in the process of exploring various options in respect of the future of the company. Consequently, they are not able to prepare and submit the 2020/21 annual report and annual financial statements”.

In a 2 February SENS notice, Denel said it experienced a delay in processing two interest payments due on 31 January. They are for R688 000 and R107 million.

“Denel and its shareholder are currently finalising the necessary approvals for the payments which will be made as soon as approvals are in place,” the company said.

Also last year Gordhan said National Treasury allocated Denel R2.9 billion to pay its government guaranteed debt and this would save Denel R250 million a year in interest payments.

Finance Minister Enoch Godongwana announced Denel would be getting an extra R2.9 billion in the 2021 Medium Term Budget, to cover debt, during his medium-term budget policy statement (MTBPS) on 11 November.

Earlier this week Bloomberg quoted Gordhan as saying government is committed to rebuilding Denel. “How this will be done in refloating Denel still has to be determined.”

While it is settling its government debt, Denel owes staff and suppliers in excess of R1.5 billion and will face court action again next week over unpaid salaries.