Financially troubled armoured vehicle and steel fabrication company VR Laser is being wound up by business rescue practitioners and its assets will be sold off within months to pay creditors.
This is according to business rescue practitioner Louis Klopper of Coronado Consulting Group. He told defenceWeb that once discussions with Denel have concluded, VR Laser’s assets will be sold so creditors can be paid, and employees will be laid off. Denel owes R28 million for delivered material, and another R12 million for work in progress. Much of this is relating to the Badger infantry fighting vehicle (IFV) project for the South African Army – VR Laser was a major supplier to Denel Vehicle Systems and Denel Land Systems.
Denel owes hundreds of millions of Rands to various suppliers and its failure to pay VR Laser is the main reason for the company’s demise – VR Laser has not been producing anything for the last two months and has not been able to pay salaries for the last three months, according to Klopper.
VR Laser also suffered major reputational damage due to its links to the Gupta family, with accusations that after the Guptas captured Denel, contracts for the Badger were diverted from Land Mobility Technologies (LMT) to VR Laser. Denel also tried forming the Denel Asia joint venture with the Gupta-linked VR Laser Asia but after a major outcry this did not proceed.
Klopper expects negotiations with Denel on things like intellectual property and materiel to take a few more weeks and then assets can be sold – to date no company has offered to purchase VR Laser as a whole and it appears South Africa will subsequently lose another specialist armoured vehicle company. Klopper expects the whole process to take several months.
Klopper told defenceWeb that Denel is almost solely to blame for the demise of VR Laser as its cash crunch caused it to scale back its contracts with the company – it was responsible for some 90% of VR Laser’s income. Reputational damage has also made it difficult for VR Laser to develop the commercial side of its business.
A Swedish armoured steel supplier is owed the majority (70%) of VR Laser’s debt, with the rest being mostly smaller component suppliers.
VR Laser had previously been a successful entity focussing on steel plate processing and specialised fabrication, and in 2012 opened a new factory in Johannesburg, which doubled its size to 22 000 square metres. The factory included six laser cutting machines, plasma cutters and various size bending presses. Its 1 500 metric ton press brake was the biggest in Africa. Apart from armoured vehicle assembly, VR Laser did work for the commercial mining industry.