Photo: Supplied/Denel

Johannesburg - The defence department said on Thursday the government had not yet made a decision on how to handle state-owned arms manufacturer Denel's financial woes.

 The department said in a statement it was concerned about a newspaper report speculating that the government might consider selling a stake in Denel.

"Such speculations should not create an impression that government is leaning towards a specific direction with regard to the challenges facing Denel," it said.

"This may send (the) wrong message to the industry as well as the financial markets during sensitive negotiations on Denel's financial situation."

In the event that a consideration or decision to sell stake in Denel was made, the government "will have to carefully determine which parts of the Denel SoC should be sold, through which model and to whom," the department said.

Earlier this month, Denel moved to assure its employees they would receive their December salaries as well as their outstanding 13th cheques despite a severe liquidity crisis.

African News Agency/ANA