South African defence firm Denel’s bonds suspended from local exchange

Denel is yet to publish its results for the year ended March 2021.
Image: Moneyweb

The Johannesburg Stock Exchange (JSE) has suspended South African state-owned defence company Denel’s bonds after it failed to submit financial results within the required timeframe.

The suspension means investors cannot trade Denel’s bonds on the JSE’s secondary market nor can Denel sell more debt on the primary market.

It marks the latest chapter in the decline of Denel, which produces weapons and ammunition for South Africa’s armed forces and overseas clients including in the Middle East.

The firm was once the cornerstone of the local defence industry but has suffered severe liquidity constraints that have hurt its ability to deliver on orders. It was allocated another government bailout in November to help it repay debt.

According to the JSE’s debt listing requirements, a state company has to submit its annual financial statements within seven months of its financial year-end.

Denel is yet to publish its results for the year ended March 2021. Its results for the year ended March 2020 were also delayed and showed an almost R2 billion loss.

“The JSE has made the decision to suspend the issuer’s debt securities with immediate effect. This announcement has been placed by the JSE in the interest of debt security holders,” the exchange said in a notice on Wednesday.

Denel declined to comment.

Refinitiv Eikon data show Denel has R140 million of outstanding bonds.

In prior years South African state-owned asset manager the Public Investment Corporation (PIC) held a large amount of Denel’s listed debt. Reuters submitted questions to the PIC, which said it was working on a response.

In a separate JSE notice on Wednesday, investors were told that Denel had experienced a delay in processing an interest payment and capital redemption.

“Denel and its shareholder are currently finalising the necessary approvals for the payments which will be made as soon as the approvals are in place,” it read.

Read:
Second Zondo report details rampant corruption at Transnet and Denel
Corrupt practices brought Denel to its knees – Zondo report
Govt committed to rebuilding arms maker Denel, says Gordhan

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Malema and Mantashe like to refer to the racist concept of “black excellence”. Malema blamed the Reserve Bank for attacking black excellence when they acted against VBS Bank. Mantashe used that phrase before the Zondo Commission to justify cadre deployment and state capture.

Let’s consider the facts for the moment. The directors and officials at VBS Bank used it as a vehicle to plunder poor depositors. The Directors of Denel used it as a vehicle to transfer taxpayer money and the assets of the nation to the Guptas.

If these are examples of “black excellence”, as professed by senior politicians, then we certainly don’t need it!

It seems as if that racist phrase is merely a smokescreen to hide the looting of public resources. Excellence does not have a color. “Race politics is the last hiding place of the scoundrel” – Lesetja Kganyago, Governor of the SARB.

End of comments.

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