Board chairperson of state-owned defence equipment company Denel, Gloria Serobe says all outstanding salaries owed to workers have now been fully paid.
Serobe, the board and company executives were briefing the media on Thursday afternoon.
She explained that the company has been experiencing serious cash flow challenges, which have hampered its ability to pay its workers.
“Denel went through a massive liquidity crisis in the last two to three years. This board…together with the management of Denel Group had to dig deep looking for solutions to this challenge. At long last, all outstanding salaries owed to employees have now been fully paid.
“Payment plans are in place for pay as you earn as well as the pension fund.
“We have not been proud of this chaos and not being able to meet these obligations. As a chairman of the board, I need to apologise profusely for the stress and the anxieties caused to the employees and their families. We do trust that this will contribute to the fostering of a productive and normal relationship between Denel and its employees,” she said.
Serobe said despite all the challenges Denel has faced, the company remains committed to “sound labour practises” and ensuring the welfare of its employees.
She outlined how Denel was able to access monies accrued through Denel Medical Benefit Trust (DMBT) to pay these salaries.
The trust was established in 2002 in order to meet Denel’s medical benefits owed to employees.
“Through the years, the assets of DMBT always exceeded the actual valued liabilities by huge amounts. It made no sense why this company was designed as such that Denel, the sponsor company, had no access to this large surplus, which as at April 2022 it was as high as R1.472 billion.
“The exercise to start unlocking this surplus took as long as two years. Most importantly, it had to be a win-win for all involved that is the pensioners, the members and Denel. To make sure that we had a proper, fair and equitable process each of these parties had an actuary to interpret and protect them.
“Fast forward to 28 July, R992 million became that surplus which could be transferred and attributed to Denel after this elaborate exercise,” Serobe said.
She warned that although the R992 million came as a boost for the ailing state company, it would not “answer all of Denel’s problems”.
“The company itself needs to be restructured. And so the new restructuring plan supported by us as the board and the shareholder will create a self-sustaining business with a significant order pipleline. Part of that plan is the sale of nine core assets and even that is communicated very well with key stakeholders.
“This will address the legacy debt…and the introduction of liquidity into the company. This will [also] immediately improve profitability, enable the company to retain and appoint skills and leadership. Some of which were lost in the process,” Serobe said. – SAnews.gov.za