Denel Unable to Pay Staff in May As It Fights to Save Itself (excerpt)
(Source: S.A. Business Day; published May 19, 2020)
By Katharine Child
Denel will not pay staff salaries for May, and wages for June and July are in jeopardy, said its CEO, weeks after it emerged that the state-owned arms maker missed the deadline to pay employee pensions and tax contributions as its long-standing cash flow crisis deepens.

“Our liquidity is under severe pressure and we have to implement drastic measures to save the company. It is highly regrettable that we will not be able to pay salaries this month, but we have no other options,” CEO Danie du Toit told Business Day in a statement.

Wages for June and July were “in serious jeopardy”, Du Toit said in a letter to staff obtained by Business Day.

Denel, a pillar of the country’s defence industry, is part of a long line of state-owned enterprises that are either in dire financial straits or on the verge of collapse after years of mismanagement and corruption due to state capture.

In 2019 it was handed a R1.8bn bailout after struggling to pay employees and suppliers. The company raised another R50m via the sale of bonds to ease the cash crunch after suffering a R1.7bn loss in the 2017/2018 financial year. (end of excerpt)


Click here for the full story, on the Business Day website.

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