All outstanding salaries owed to Denel employees have been paid, chair of the state-owned company Gloria Serobe said on Thursday.

She said this was the culmination of a lengthy process of consultation and litigation between Denel, trade unions and organisations representing existing and former employees.

Denel, which was hollowed out by state capture and has been battling to pay employees and debtors, was allocated R3bn to cover interest payments on debt in the February budget.

The Johannesburg labour court in February ordered the entity to pay R90m in salaries owing from April 2020 within 10 days.

When no payments were made, Solidarity obtained warrants of execution to attach assets of the arms manufacturer and money in two of Denel's bank accounts.

“We are pleased to report that this process has been completed. We also have payment plans in place for the SA Revenue Service and the pension fund. This demonstrates our commitment to the welfare of our employees and the high value we place on sound labour practices,” Serobe said.

She said the group could now proceed with the restructuring and repositioning of Denel as a sustainable enterprise and a valuable and strategic asset for SA.

Denel said the cash used for the payment of the outstanding salaries came from a funding initiative to unlock excess funds in the Denel Medical Benefit Trust (DMBT) established in 2002. The trust was the vehicle Denel used to meet its medical aid obligations to employees who joined the group before 2002.

Denel said through the years, the assets of the trust exceeded the actuarial valued liabilities. The entity developed a strategy to unlock the excess assets while ensuring that the members’ medical benefits and pensioners’ interests were not affected.

Serobe said the new restructuring plan, supported by the board and the government, would create a self-sustaining business with a healthy order pipeline.

She said the sale of noncore assets was well under way.

“We wish to thank the pensioners' forum, the DMBT trustees and employees who contributed to the process to ensure the payment of the outstanding salaries. We want to thank employees for their support and commitment during the challenging period we faced,” Serobe said.

“We apologise for the stress and anxieties caused to them and their families. We trust that this will contribute towards the fostering of a productive and normal relationship between Denel and its employees.”

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