State-owned arms maker Denel on Friday said the government’s decision to recapitalise the entity with R1.8-billion will contribute to its turnaround and help to create a sustainable asset for South Africa.
CE Danie du Toit noted that the recapitalisation followed the tangible progress of detailed plans to restructure the business, enter into strategic partnerships and find new markets for its high-technology products and solutions.
“We are grateful for the unwavering support that we receive from 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,” he said.
Government and Denel agreed that it was a strategic national asset that added great value to the defence and security sectors, but also contributed to broader efforts in the fields of technology, advanced manufacturing and skills development, the group added.
“The allocation forms part of a R2.8-billion request, of which the additional R1-billion 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. It will also bring relief to our partners and supply chains who have been affected by Denel’s liquidity issues in recent months.”
Du Toit said the continued careful management of the supplier base, as well as the on-time and on-budget execution of projects would be critical in the next 12 months.
Denel remains aligned with the shareholder’s expectation that it dispose of noncore assets on an urgent basis and establish strategic equity partnerships across the various divisions of the company.