State pension funds used in effort to help bail out ailing Denel

State pension funds used in effort to help bail out ailing Denel

- Denel, the arms manufacturer, is in financial troubles, but bonds purchased by the state's Public Investment Corporation saved its skin

- The PIC holds bonds of R2.8 billion on behalf of the Unemployment Insurance Fund and Compensation Commissioner

- The bond purchases were criticised as a gamble with the money of workers and pensioners

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The government's asset manager, the Public Investment Corporation bought about R2.8 billion in Denel bonds.

The PIC purchased the bonds with money from the Compensation Commissioner and the Unemployment Insurance Fund, according to a report by The Citizen.

The decision to buy these bonds were denounced as a gamble with the money of South African pensioners and workers.

The PIC now holds almost 90% of Denel's bonds, which it bought up in the past year.

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By purchasing these bonds, the PIC is basically saving Denel's skin because private investors are wary of dealing with the weapons company in its current state.

This support comes after President Ramaphosa refused Eskom's request for a R100 billion bailout.

Briefly.co.za gathered that the DA accuses the PIC of a stealthy bailout because the bond purchases weren't general knowledge.

This is a state bailout, irrespective whether it is a grant from National Treasury or a PIC investment via bonds. Denel must be sustainable on its own.

Since December of 2017, the PIC went from holding bonds worth R350 million to R2.8 billion.

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Denel's spokesperson stated that the company will soon become profitable again and that it has raised enough funds from the bond markets to honour its obligations.

About a month ago, Briefly.co.za reported that Denel was having a hard time making profits after allegations of nepotism and corruption shook it almost to its knees. Employees feared they wouldn't receive their salaries.

Denel is also under new management, as Danie du Toit was appointed as CEO:

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Source: Briefly.co.za

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