10 March 2001
The Minister of Public Enterprises Mr. Jeff Radebe, MP, the CEO of Denel, Mr. Flip Botha, and the President and CEO of Turbomeca, Mr. Emeric d'Arcimorles today signed a Statement of Intent for the acquisition of a majority shareholding by Turbomeca in a company to be formed from Denel's Airmotive division.
Today's signing follows Cabinet approval last August for a range of restructuring options for Denel, the state owned defence-related industrial enterprise. The selection of Turbomeca as a preferred strategic equity partner for Denel's Airmotive division takes further expression today with the Statement of Intent. The Statement outlines the jointly agreed transaction principles, objectives, processes and clear timetables. These were agreed at a very constructive and cordial meeting in Paris on 2 March 2001 between a South African delegation led by Minister Radebe and a Turbomeca delegation led by Mr. Emeric d'Arcimoles, the company's President and CEO.
The principle objectives of the agreement are numerous. They include agreement that the potential transaction takes place within the context of South Africa's overall restructuring programme for the defence-related industry in a manner that provides a win-win combination of factors for both parties. Both Airmotive and Turbomeca bring specific strengths to the table in particular areas, and both agree that a formalised partnership will not only consolidate their leadership in these areas, but will also lay the foundation for further growth and development of opportunities.
Denel's Airmotive, and by extension South Africa's defence industry, stands to benefit in a number of ways from the successful conclusion of the transaction. These include increased access to global defence and civil markets, the transfer and diffusion of critical technologies and know-how to Denel, and working towards a significant increase in the manufacturing base for Airmotive and Turbomeca's products particularly within the African market.
Furthermore, the transaction recognises the critical importance of Denel as a principal supplier and supporter of the SANDF and our own domestic and regional security capabilities. It adopts the view that the new Airmotive will continue to be the principal supplier of particular services and products to the SA defence and security community. This is especially true in the area of specific research, production, manufacture, repair, overhaul and maintenance of at least 5 helicopter engines currently in use in the SANDF, SAPS, Portnet and other entities.
Turbomeca has identified South Africa as a strategically important market, and in this context has undertaken to provide additional support and access. Turbomeca intends, inter alia, to extend new Airmotive's capabilities as a manufacturing shop involved with the design of new engine types, gearboxes, and related products.
An important element of the proposed transaction is the inclusion of a number of initiatives to support and extend current government-led and Denel social investment programmes. The focus is on engineers, technicians and skilled and semi-skilled machine tool operatives, and includes student exchange programmes in both South Africa and France, and providing South Africans with access to engineering technology in France. Both Denel and Turbomeca will implement these programmes fully cognisant of the challenges facing our country in terms of the Employment Equity Act, and the need to select, train and produce highly skilled engineers in the black community.
Minister Radebe has expressed his delight with the manner in which the long-term relationship between Denel Airmotive and Turbomeca has reached this decisive point. "Whilst the consolidation of the partnership takes place between two fine companies, we must not underestimate the importance this transaction holds for the continued strengthening of South African - French political and economic relations. The importance of the transaction rests with its specific and detailed emphasis on skills and technology transfer and diffusion, as well as the prospects it holds for job creation in an important and growing high-tech sector of our economy. This falls firmly in line with the imperatives that have been identified by President Mbeki's government for this current phase of economic restructuring."
Enquiries:
Fani Zulu
Director: Communications
Ministry of Public Enterprises
082 451 0457