Denel asks for R2.8bn cash injection from the state

CEO Danie du Toit said the state-owned entity needs help to overcome acute liquidity constraints.
CEO Danie du Toit said the state-owned entity needs help to overcome acute liquidity constraints.
Image: AFP / Alexander Joe

State defence company Denel has asked the government for a R2.8bn cash injection to help it emerge from a financial crisis and secure lucrative export deals, its chief executive said.

Denel, a cornerstone of the country's once-mighty defence industry, is one of several state firms whose finances were damaged by years of mismanagement during former president Jacob Zuma's tenure.

CEO Danie du Toit, appointed late last year to oversee a turnaround plan, said recovery efforts were progressing well and Denel could secure deals worth R30bn in the next two years if it received help to overcome acute liquidity constraints.

Denel produces military equipment from ammunition and armoured vehicles to missiles and attack helicopters for the SA's armed forces and for export.

"We have an excellent return on investment potential on recapitalisation," Du Toit said in an interview at Denel's offices outside Pretoria.

He said he hoped the cash injection would be announced this month and that the funds would arrive in September or October.

He added that Denel would not sell equity in any of its divisions to Saudi Arabia's state defence firm SAMI, which made a $1bn (R14bn) bid last year for a broad partnership with Denel.

Under President Cyril Ramaphosa, public finances are stretched by the need to rescue other ailing state firms such as loss-making power company Eskom and SA Airways, which have both already received cash injections.

- Reuters


X