Trade union Solidarity has welcomed the announcement from state-owned arms manufacturer, Denel, that all outstanding salaries have now been paid.
Denel says it has paid R318 million in outstanding salaries.
The company also has a new restructuring plan to help rebuild its industrial capabilities.
The new leadership says they are looking at six elements that will turn the company around in the next 15 to 18 months.
It is strategising on reducing costs and increasing revenue, formulating partnerships that will give them access to markets and improving technologies and funding mechanisms.
Sector Coordinator for Defence at Solidarity Derek Mans says: “We started the battle or court applications in regard to outstanding salaries in March 2020, so we do welcome it. They didn’t have the cash and they were looking at different avenues to obtain the cash and this money they got from a surplus fund, the Denel medical aid benefit trust. They got over R900-million from this fund. Operational they have enough, at least for this financial year, to pay salaries and deal with the day-to-day operational issues.”
Financial distress
Denel’s Head of Restructuring Riaz Saloojee says the state-owned arms manufacturer remains in serious financial distress.
He says the organisation, which was once profitable, now only has revenue of just under R2 billion, down from R8.2 billion in 2015/16.
Saloojee says their liquidity challenges were made worse by the coronavirus and State Capture to the point where they were unable to pay salaries.
Denel has been bailed out numerous times by the government.
Saloojee says its mandate and its existence remain important as they have a responsibility to the National Defence Force and to support civilian authorities during specific contingencies.
Denel pays all outstanding salaries:
-Additional reporting by Amina Accram
