BL Premium reports that an intergovernmental team representing the departments of public enterprises, defence and the Treasury are working on a plan to provide financial support for bankrupt state-owned arms manufacturer Denel.

This was indicated to MPs on Wednesday by the director-general of public enterprises, Kgathatso Tlhakudi. “We are currently determining the form of support that Denel will receive for it to restructure itself and to ensure that it has the working capital to execute its orders,” he said. The government was also ensuring that Denel’s government-guaranteed loans were paid off, while it would ensure that there was a pipeline of work not only for Denel but for the broader defence industry. Tlhakudi insisted that the proposed government support was a recapitalisation and not a bailout. Denel is technically insolvent and available cash is insufficient to meet operational requirements, including the payment of salaries and suppliers. Denel currently owes R636m to employees and related costs, and about R900m to suppliers. “Some employees in their individual capacity have submitted court applications for the amounts owed to them. This poses a threat to Denel’s assets as execution orders to attach assets have been granted by the courts. The threat of other suppliers making a similar application persists as increased letters of demand are delivered to Denel,” Hlakoane said.

• Read the full original of the report in the above regard by Linda Ensor at BusinessLive (paywall access only)

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