- Denel issued a noteholders circular that it planned to defend itself from SAAB Grintek Defence's court application to have it liquidated.
- SAAB Grintek Defence applied to the North Gauteng High Court in Pretoria to have Denel liquidated after it failed to pay its debts.
- Union UASA said it hoped that government would step in to resolve the matter
After lingering speculation about the fate of the state-owned arms producer in the face of financial turmoil, Denel issued a noteholders circular that it planned to defend itself from SAAB Grintek Defence's bid to have it liquidated.
SAAB Grintek, a South African subsidiary of Swedish aerospace and defence giant SAAB, has applied to the North Gauteng High Court in Pretoria to have Denel liquidated after it failed to pay its debts to the private company.
Denel has been in the throes of financial instability with the entity's ability to pay salaries to its staff on time being drawn into question on multiple occasions in recent years.
Denel issued a noteholders circular on Tuesday morning saying the entity's management was aware of media reports on its financial position as well as SAAB Grintek Defence's liquidation bid at the courts. The notice said Denel hoped to resolve matter amicably but was ready to defend itself.
"Noteholders are referred to various press articles relating to an application by SAAB Grintek Defence for the liquidation of the company.
"In this regard, noteholders are advised that Denel is currently engaging with SAAB Grintek Defence to reach an amicable outcome, and if need be, will engage its legal advisors to defend this matter, " the notice said.
Spokesperson for union UASA Abigail Moyo said while it was still early to comment in detail, organised labour hoped that government would be able to step in and assist Denel in resolving the matter with SAAB.
"We are hoping that government is prompted to assist Denel as an SOE on this liquidation application from SAAB. We are diligently monitoring the situation in order to know if the application will be proven to be successful or not," said Moyo.
Last month Public Enterprises Minister Pravin Gordhan said the state arms producer faced significant financial pressures as it had a R11 billion audit book but could not secure capital to initiate projects.
"It is highly regrettable that Denel last paid full salaries in May of 2020. The current amount owing to employees is about R500m and the business has experienced a loss of critical skills to domestic and foreign companies.
"The board continues to make efforts to secure funding to pay salaries and implement its turnaround strategy to restructure Denel into a far more effective organisation," Gordhan said.
Public Enterprises director general Kgathatso Tlhakudi told Parliament that Denel had developed a new plan to deal with financial challenges and restructure.
"There will be a need to help Denel with regards to its finances. We are looking to leverage our strategy to secure finance for Denel and are having national discussions to look at how Denel can be assisted in the interim phase," said Tlhakudi.
Regarding financial challenges and paying salaries on time at Denel, the arms producer's chair Gloria Serobe said the minister asked the board to be closer to operations and that executives were spending a lot of time with labour dealing with issues of operations including salary payments.