State-owned defence and security conglomerate, Denel, was granted a lifeline at the weekend with an extension given to repay R690 million due on two debt notes.
A statement said the extension to settle the unsecured debt was “a welcome relief to Denel as it resolves its current challenges”.
“The extension of the term of the notes is part of an overall debt restructuring programme to allow the company to restructure its balance sheet and engage critical stakeholders around its turnaround,” the statement continues.
The extensions are on a R290 million note taken up in June 2013 and the second on a similar note for R400 million taken up in November 2015. The statement does not give an indication of the length of the extension or any renegotiated repayment terms.
The new Denel board, appointed by Public Enterprises Minister Pravin Gordhan earlier this year has spent the past few weeks working with recently appointed acting group chief executive, Michael Kgobe, and the Denel management team reviewing the group’s current corporate plan. This has seen the profit and loss position of each Denel division come under the microscope to enable a start on “an effective and sustainable growth trajectory”.
According to the statement the changes have been “positively welcomed by employees and critical stakeholders and are viewed as a step in the right direction to refocusing Denel on its mandate”.
The Denel website gives no information on its mandate stating its vision is to be “the credible State-owned South African strategic partner for innovative defence, security and related technology”.
It goes on to state that “as a value driven State-owned company, Denel’s purpose is to supply the South African defence and security environment with strategic technology capability, products, services and support; leverage indigenous capability to access selected export markets; contribute to government socio-economic imperatives including job creation, skills development and social investment; enhancing local technology and the South African manufacturing base; supplier development; exploiting commercial use of technology; foreign policy and regional security objectives; being a responsible corporate citizen to ensure good governance and sustainability as well as transformation and employee wellbeing”.
Monhla Hlahla, Denel chair, said the board was “obviously pleased” with the debt extension.
“We are not out of the underlying difficulties yet. The company and every division has begun the tough journey to review how they can contribute positively to the turnaround journey we have started.
“With the right focus and leadership, Denel can return to its role as a positive and key contributor to the defence and security of South Africa.”