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Company News

UPDATE 1-South Africa eases defence firm Denel's bailout terms

(Adds detail, context)

JOHANNESBURG, Nov 6 (Reuters) - South Africa’s government has eased the terms of a 576 million rand ($37 million) bailout given to state defence company Denel for the financial year that ends in March 2021, officials told Reuters.

Denel, which makes military equipment for South Africa’s armed forces and export, has faced a liquidity crisis and struggled to pay full salaries to some staff this year.

Denel was allocated 576 million rand to pay off guaranteed debt, but the company asked the government to allow it to use the outstanding 271 million rand to support activities that would generate revenues.

“The Minister of Finance indeed waived the conditions and allowed Denel to use the funds for any purpose apart from paying off guaranteed debt,” said Kgathatso Tlhakudi, director-general of the Department of Public Enterprises (DPE).

The National Treasury told Reuters that Denel’s recapitalisation conditions had been amended, saying the matter had been resolved following discussions between Treasury and DPE’s legal teams.

Asked whether Denel could draw down the remaining 271 million rand any time from now, a Treasury spokesperson said in an emailed response to questions: “Yes, that is correct.”

$1 = 15.7271 rand Reporting by Alexander Winning; Editing by Joe Bavier and Edmund Blair

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