State-owned Denel has been granted an extension to repay its unsecured debt that was due on June 10.
The extension is on a R290-million debt note that was taken up by Regiments Capital in June 2013, and a R400-million debt note in November 2015 and is “a welcome relief to the company as it resolves it current challenges”, the aerospace company said on Monday.
The extension of the term of the note is part of an overall debt restructuring programme to ease the liquidity constraints and to buy time to restructure the overall debt of the company, while engaging with critical stakeholders around a turnaround strategy.
Denel’s board of directors spent the past weeks supporting the new acting group CE Michael Kgobe and his management team in reviewing the existing corporate plan by scrutinising the profit and loss position of each division, so that the company “can start on a cost effective and sustainable growth trajectory”.
Following the appointment of Pravin Gordhan as Public Enterprise Minister in February, the company further said it has seen a number of key changes, starting with a new board and the appointment of a new acting CE when the previous incumbent resigned.
The changes taking place in the company have been positively welcomed by employees and the public, including critical stakeholders, and are viewed as a step in the right direction towards refocusing the company on its mandate.
“We are obviously very pleased with the extension as it was always the most difficult portion of our debt. We are, however, not out of the underlying difficulties yet,” said Denel chairperson Monhla Hlahla.
She added that the company requires more cash instead of costs, and “we hope that each and every division has begun the tough journey to review how they can contribute positively to the turnaround journey that the company has started.
“With the right focus and leadership, Denel can return to its role as a positive and key contributor to the defence and security of South Africa,” she noted.