SOUTH AFRICA – Denel, a stated-owned arms manufacturer, has received $118.7 million from the government to help it stay afloat while it develops a long-term survival strategy, reports Business Live.
In a statement, the company’s chief executive Danie du Toit said; “We are grateful for the unwavering support that we receive from our shareholder, the government, and the National Treasury,”
“It demonstrates a confidence at high level for the measures taken by the new board and management and a commitment to support us through the next stages of the turnaround.”
Denel which is one of several state-owned enterprises (SOEs), fell into an operating loss of $1.12bn in the 2017/2018 fiscal year.
This is after years of mismanagement and corruption that put the country’s last remaining investment-grade rating at risk.
Du Toit said the company, which sold $3.29million worth of two-year floating-rate notes this month, had received the funding after satisfying the Treasury that it was making progress in restructuring its business, entering new strategic partnerships, and finding new markets for its technology.
”The allocation forms part of a $1.84 billion request, of which the additional $6.59 million will be considered in the 2020/21 budgetary process.
“The allocated portion will enable Denel to improve delivery performance and support to local and international customers,” He added.
“It will also bring relief to our partners and supply chains who have been affected by Denel’s liquidity issues in recent months.”
The company had asked for $184.7 million. It said the other $65.9 would be considered during the process of preparing the 2020/2021 budget process.
The company continues to fulfil its shareholders expectation of it disposing of non-core assets on an urgent basis and establishes strategic equity partnerships across the various divisions of the company.
Du Toit says Denel will continue working hard in achieving the conditions that comes with the recapitalisation. Continued careful management of the supplier base, on-time and on-budget execution of projects is critical in the next 12 months.
The money will help keep the state-owned arms manufacturer afloat while it tries to find a long-term survival strategy.