Denel's board chair resigns, departure follows other recent exits

SA state-owned weapons manufacturer Denel says its board chairperson Monhla Hlahla and another non-executive director had resigned, days after it announced the departure of several other board members.

The company, which makes military equipment for SA's armed forces and for export, did not give a reason for the resignations, which deepen the crisis at Denel. It depends on government bailouts and has faced liquidity problems.

Its fortunes have worsened during the Covid-19 pandemic, as some of its trade unions took the weapons manufacturer to court after it failed to pay full salaries during some months last year.

Denel said in an announcement on the JSE on Thursday that a recruitment process for a new board chair was under way.

A company spokesperson referred all questions to the department of public enterprises, the main ministry responsible for Denel. A spokesperson there said the department would comment at an appropriate time.

Denel, a pillar of the country's once-mighty defence industry, is one of a handful of loss-making state firms the government is trying to return to profitability.

Though the government has approved a turnaround strategy premised on asset sales and disposals, few have materialised. Sources at two local defence companies say their efforts to buy Denel assets have been rebuffed.

Denel made a R2bn loss in the year to the end of March 2020, the last year for which financial results are available.

In a presentation in parliament this week, it listed among its problems: slow progress in selling non-core assets and exiting loss-making businesses, underfunding for projects of strategic national importance and a worsening debt profile. 

Reuters