The undisclosed lender that stepped in to help Denel pay its June salaries in full is a local commercial bank.
This is according to Engineering News Online, which quoted Public Enterprises Minister Pravin Gordhan’s spokesperson Adrian Lackay as saying the lender was “a commercial bank in South Africa”. Lackay added that “Neither I nor the Ministry of Public Enterprises are privy to specific details of the transaction – it is a commercial transaction between a bank and its client, and subject to their confidentiality rules. The running of Denel’s daily operations are left to the Board which exercises its oversight function over the company’s management.”
At the beginning of this week, Denel chief executive Danie du Toit said in a memo to personnel that the defence and technology conglomerate would only be able to meet 85% of its salary bill for June. This, he said, was because of “ongoing liquidity challenges”.
Hours after Denel employees heard they would be short paid for June, Gordhan during the State of the Nation debate in Parliament on Tuesday said that “a lender has come to the assistance of Denel and full salaries will now be paid.”
Democratic Alliance (DA) MP Natasha Mazzone maintains the arrival of an unidentified lender ensuring full salaries for Denel employees is “a temporary bandage for an entity on the brink of collapse”. Mazzone, the DA shadow public enterprises minister, said the financial assistance provided at short notice by an as yet unnamed lander was “not a get out of jail free card but a temporary reprieve”.
Du Toit said Denel is busy with a comprehensive programme to restore good corporate governance, reduce costs and find new opportunities for growth, especially in export markets.
Denel said the shareholder, the board and management are continuously working to find sustainable solutions to the liquidity crisis facing Denel. “However, it is still facing challenges. Government is aware of the fact that Denel is highly leveraged and in need of recapitalisation to rebuild the business.”