Denel CEO announces salaries will be paid in full by Friday

Denel CEO Danie du Toit said he was confident that the company's turnaround plan would ensure the long-term sustainability of the business.

Du Toit said this on Wednesday when he confirmed that the state-owned arms manufacturer would pay full salaries to all Denel employees by Friday this week.

This follows a company statement on Tuesday morning that the company would be able to pay only 85% of salaries this month due to liquidity constraints.

On Tuesday afternoon, public enterprises minister Pravin Gordhan announced in parliament that a lender had come to the assistance of Denel and that full salaries would  now be paid.

"There is no clearer example of the damaging effects of state capture than the financial strain and uncertainty the 3,500 Denel employees and their families may face each month if the company's liquidity problems continue," Gordhan said.

Denel CEO Danie du Toit said on Wednesday the balance of the employees' salaries would be paid by Friday.

Du Toit assumed his position in January this year. The board, when it announced his appointment in December last year, said his role would be to help build on the cash-strapped entity's turnaround strategy introduced in 2018.

Du Toit said the shareholder, the board and management were continuously working to find sustainable solutions to the liquidity crisis facing Denel.

He said Denel was, however, still facing challenges.

"Government is aware of the fact that Denel is highly leveraged and in need of recapitalisation to rebuild the business."

He said the company was pursuing business to strengthen market access and enable the development of new technology.

He said systems and processes were in place to strengthen governance, improve programme management, drive efficiencies and grow revenues.

"I am confident that working together towards the long-term resolution of the current challenges we will ensure the long-term sustainability of our business," he said.

Speaking to Radio 702 on Tuesday, Du Toit said Denel's previous management had signed loss-making contracts but the new management was trying to renegotiate those contracts.

"Largely, our balance sheet is weak for the moment because of those onerous historical contracts," Du Toit said.