A two-year hiatus in salary payments has started to come to an end for Sunspace staff, as the first tranche of payments from the Department of Science and Technology (DST) was made on Friday.
After Sunspace was wound down, the DST acquired all Sunspace assets, at a cost of R55 million. The DST approached Denel to execute the contracts previously undertaken by Sunspace, using Sunspace personnel.
As part of the deal, the DST agreed to pay over R27.5 million in the first instalment, which was expected on 1 July, and later at the end of July. However, paperwork requirements and a need for National Treasury to approve the pay-out delayed the payment, which was finally made on Friday.
Tygerberg Trustees confirms the amount was received and the bulk of it transferred to staff on Saturday, as employees must be paid first. The final amount will be paid on 13 December, settling agreed outstanding amounts under the business rescue plan.
Most of the former staff will move to a unit within Denel, which will be based in Stellenbosch. The state-owned arms manufacturer will undertake work for the South African National Space Agency.
The DST’s bid for Sunspace was agreed to by the majority of stakeholders who voted on the business rescue proposal, a situation the satellite maker found itself in as it was unable to pay creditors, and has not paid staff for more than two years.
The plan, however, noted its precarious financial position was not caused by the incompetence or neglect of directors or staff. “In fact, just the opposite is true. It is remarkable what the company achieved with the limited financial sources available and with the required government support sadly lacking, notwithstanding numerous decisions and undertakings to do so.”
The alternative to the proposed business rescue plan was liquidation, which would have left it with a shortfall of R150 million. Accepting the DST’s proposal trimmed the shortfall to R103.5 million.
The DST’s offer followed Cabinet’s approval, in March 2011, that would see the state take up between 55% and 60%, allowing Sunspace to lean on government to fill its order books, at an estimated cost of R100 million. However, science and technology minister Derek Hanekom later said government would only invest if Sunspace provided a viable business case to demonstrate its long-term sustainability.
Sunspace is involved in low-earth orbit satellite development, design, building, integration, testing and commissioning. However, it was under-capitalised and was not able to pay creditors. Without government support, Sunspace could not grow and prosper.