“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.
If Denel is liquidated the impact on the SANDF, in particular the Air Force, will be extremely damaging. The Air Force will almost certainly be forced to retire aircraft like the Oryx, Rooivalk, and C-130BZ as supporting them becomes impossible. These are critical aircraft. 2/— Darren Olivier (@darren_olivier) May 19, 2020
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)
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