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Denel can now pay full salaries at 11th hour

Jun 25 2019 17:39
Fin24

Public Enterprises Minister Pravin Gordhan says a lender has come to the assistance of state-owned arms manufacturer Denel and full salaries will be paid to all its employees.

Earlier on Tuesday, Denel's CEO Danie du Toit said in a statement that the cash-strapped company had no alternative but to cut back on salaries this month. This meant that employees would receive only 85% of their salaries for June.

"Due to ongoing liquidity challenges we are now faced with the unfortunate reality that the company is not in a position to fulfil the 100% salary obligation for June 2019," Du Toit said at the time.

'Substantial harm' from state capture

But Gordhan announced that this had since been resolved and all salaries would be paid in full.

"There is no clearer example of the damaging effects of state capture than the financial strain and uncertainty the 3 500 Denel employees and their families may face each month if the company’s liquidity problems continue.

"Denel, our producer of military and aerospace equipment, is a crucial and strategic state entity that was substantially harmed by state capture," he said.

He said Denel had implemented several turnaround measures, including renegotiating existing contracts, reviewing its supply chain and procurement processes to reduce costs as well as reducing employee costs through voluntary severance packages.

"Importantly, the company has a pipeline of potential contracts in excess of R30bn," said Gordhan.

denel  |  pravin gordhan  |  salaries  |  soes  |  state capture
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