November 9, 2018 / 10:30 AM / 4 days ago

Union demands bailout for South Africa defence group Denel

PRETORIA, Nov 9 (Reuters) - South Africa’s government must urgently inject at least 7 billion rand ($491 million) into struggling state-owned defence group Denel, the National Union of Metalworkers of South Africa (NUMSA) said on Friday.

Denel reported a 1.7 billion rand loss for the 2017/18 financial year and is struggling to pay worker salaries and deliver on roughly 18 billion rand of outstanding orders.

“It is a matter of time before Denel is completely destroyed,” NUMSA, which represents around a quarter of Denel’s workforce of around 4,000, said in a statement.

“Such an amount will go a long way, not just to pay Denel’s suppliers, but it will be sufficient enough to ensure a viable turnaround strategy,” the union said.

It was not clear how the union had arrived at the 7 billion rand figure.

Around 100 NUMSA members marched to the ministry of public enterprises in the capital Pretoria on Friday to press their demands. The marchers carried placards bearing slogans including “Bailout Denel or no votes next year” and “Denel not for sale”.

NUMSA and Solidarity, another union with members at Denel, have both rejected a management proposal to cut their salaries by around 20 percent from the end of November as part of short-term cost-saving measures.

But the two unions diverge over the need for an equity partner. NUMSA rejects the sale of stakes in Denel units but Solidarity sees it as a necessity for the company’s survival.

Reuters reported on Thursday that Saudi Arabia had made a $1 billion bid for a broad partnership with Denel.

South African President Cyril Ramaphosa last week said Denel was “ripe for joint-venture partnerships”. But he said the government had not yet weighed the Saudi bid or proposals from what he said were a number of other suitors looking to partner with Denel. ($1 = 14.2623 rand) (Reporting by Alexander Winning Writing by Joe Bavier Editing by James Macharia)

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