(Bloomberg) -- South Africa’s state-owned arms manufacturer Denel SOC Ltd. has a multi-billion rand debt problem and no plan as yet on how to tackle it.
Denel has 2.34 billion rand ($186 million) of bonds maturing in September, a challenge for a company in the midst of a liquidity crisis. The Pretoria-based company, beset by allegations of mismanagement and corruption, required a government guarantee of 850 million rand in December to to raise money to pay salaries and its suppliers.
The company said it’s in talks with the National Treasury and hoped to have a plan in place by the end of June to deal with its debt obligations. Denel would also “attempt to develop long-term solutions to the current liquidity challenges,” Vuyelwa Qinga, group executive for communication and public affairs, said in an emailed response to questions.
Denel paid about 30 million rand in coupon due on 1.46 billion rand of floating-rate notes on Monday and would meet other interest payments still outstanding, Qinga said.
The majority of Denel’s debt is held by the Public Investment Corporation, which oversees about 2 trillion rand of state employees’ retirement savings. Those benefits are guaranteed by the government and in the case of lower-than-projected investment returns, taxpayers ultimately have to fund the shortfall.
Public Enterprises Minister Pravin Gordhan appointed a new board for Denel in April.
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