SANDF's Necessary Company, Denel, Needs to Restructure to Stay Afloat

• Denel, the financially suffering State arms-maker, requires capital in order to save themselves through a restructuring process
• Denel is facing financial strain indicated by them being incapable of providing full salaries, causing the exiting of skilled staff members and litigation
• The state-owned company has been on the receiving end of a number of hardships during the past few years amid allegations of corruption and financial turmoil

Denel, a state arms-maker, requires funding to restructure and save itself. The business is crucial to the South African National Defence Force meeting its mandate, according to the Public Enterprises Department.

Denel is facing crippling financial strain as shown by its inability to distribute full salaries, resulting in the departure of skilled staff members and litigation focused on liquidating the company.

The state-owned company has faced a number of tribulations over the prior few years with alleged corruption and financial turmoil. The company, currently surviving on the guarantees of Government, indicated a nett loss of R1.2 billion at the end of December.

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Following reports by Fin24, the Department of Public Enterprises’ director-general Kgathatso Tlhakudi expressed that Denel requires an updated business model in order to improve its delivery however the restructure will require capital. Denel is looking into exiting a portion of its businesses as a way to raise the capital needed.

According to EWN, Tlhakudi confirmed that conversations with the Department of Defence indicated Denel is still important to the defence force's capabilities.

South African rand breaks R15 to the US dollar

In other business-related news, Briefly News reported that the South African rand broke the R15 to the dollar level on Thursday, 19 August, trading at R15.03 to the US dollar. This happened just three hours after the Johannesburg Stock Exchange (JSE) opened. At the time of writing this report, the rand was trading at R15.18 to the dollar.

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The dollar is continuing to strengthen, thus weakening the rand. Expectations of an increase in interest rates have reportedly been decreased given a better-than-forecast consumer price inflation rate for July. The rand has reached its weakest level since March, according to a report by Moneyweb.

According to SABC News, on Tuesday, trading on the JSE was delayed. This was due to the large trading volumes that extended to a record R145 billion. The trading still needs to be processed.

Source: Briefly News