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Arms maker, Denel to use part of his ransom on income-generating activities
The South African government has lowered the terms of a 576 million rand bailout given to state defense company Denel for the financial year ending March 2021, officials told Reuters.
Denel, who makes military equipment for South Africa’s armed forces and for export, has faced a cash crunch and has struggled to pay full salaries to some staff members this year.
Denel was allocated R576 million to pay off the secured debt, but the company asked the government to allow it to use the outstanding R271 million to support revenue-generating activities.
“The Finance Minister actually waived the conditions and allowed Denel to use the funds for any purpose other than to pay the secured debt,” said Kgathatso Tlhakudi, director general of the Department of Public Enterprises (DPE).
The National Treasury told Reuters that Denel’s recapitalization conditions had been amended, saying the matter had been resolved following discussions between the Treasury and DPE’s legal teams.
When asked if Denel could withdraw the remaining 271 million rand at any time from now, a Treasury spokesman responded in an email to questions: “Yes, that is correct.”
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