Johannesburg – South Africa’s government has eased the terms of a R576 million bailout given to state defence company Denel for the financial year that ends in March 2021, said officials.
Denel, which manufactures military equipment for South Africa’s armed forces and export, has faced a liquidity crisis and struggled to pay full salaries to some staff this year.
Denel was allocated R576 million to pay off guaranteed debt, but the company asked the government to allow it to use the outstanding R271 million to support activities that would generate revenues.
“The Minister of Finance indeed waived the conditions and allowed Denel to use the funds for any purpose apart from paying off guaranteed debt,” said director-general of the Department of Public Enterprises (DPE), Kgathatso Tlhakudi.
The National Treasury said that Denel’s recapitalisation conditions had been amended, adding that the matter had been resolved following discussions between Treasury and DPE’s legal teams.
Asked whether Denel could draw down the remaining R271 million any time from now, a Treasury spokesperson in an emailed response to questions: “Yes, that is correct.”
