Red Falcon, Missiles Prioritized for S. Africa Defense Needs
(Bloomberg) -- An attack helicopter known as the red falcon and an array of missiles, artillery, armoured vehicles and drones are products Denel SOC Ltd., which traces its roots to the arms company set up by South Africa to bypass sanctions during apartheid, is trying to save as it struggles to stay afloat.
The state company is seeking seeking equity partners for a number of units including the one that makes the Rooivalk, or Red Falcon, helicopter and says it has had a number of expressions of interest from local and foreign defense companies.
Denel has been unable to pay salaries in recent months and is seeking financial support from South Africa’s cash-strapped government. It has decided to retain five core divisions so as to protect the country’s “sovereignty” while disposing of others, including a unit that can produce satellites and a de-mining operation.
“Denel is pursuing strategic equity partners,” the company said in a response to queries, said Denel. The company is “certain that the strategic equity partnerships will bring the necessary capital injections, technology and further strengthen its relationship with the South African National Defence Force by maintaining important and sovereign capability.”
Denel’s plight is mirrored in other government-owned companies ranging from the national power utility to the state airline that were plagued by mismanagement and corruption during the nine-year rule of President Jacob Zuma who was ousted by his party in 2018. While labor unions and the ruling African National Congress have opposed privatization of state assets in the past a number of the companies are now seeking partnerships as the government can no longer afford to bail them out.
Denel was split out from Armscor in 1992 and has seen the defense budget compete with social needs such as housing and health in the post-apartheid era. The company was not allocated any additional money in an interim budget on Oct. 28 while South African Airways was.
“We are engaging with our shareholder, the public enterprises ministry, on the financial and strategic support required for the stabilization of Denel,” the company said. “We have requested funding from the Department of Defence for the maintenance of strategic and sovereign capabilities..”
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