The Department of Science and Technology (DST) says the core capability of Sunspace's manufacturing unit will be used to develop and broaden a competitive satellite manufacturing industry in SA.
"The capability will be developed to serve the satellite development needs of the country and the rest of Africa, as well as other regions of the world," the department says in a statement. Its announcement follows most shareholders accepting the department's R55 million offer to take over the unit, which will be placed under Denel's care.
In the statement, science and technology minister Derek Hanekom welcomed the decision, which was an offer for its intellectual property and tangible assets. Sunspace went into business rescue as it was unable to pay creditors, and has not paid staff for more than two years.
The department expects the absorption process to be completed by the end of this year.
Denel will take over the intellectual property and the bulk of the staff, and operations will continue at the same premises in Technopark, Stellenbosch. A new business unit within Denel Dynamics, which focuses on tactical missiles, precision-guided weapons and unmanned aerial vehicles, will be created.
Sunspace's precarious financial position was not caused by the incompetence or neglect of directors or staff, states the rescue plan.
"In fact, just the opposite is true. It is remarkable what the company achieved with the limited financial sources available and with the required government support sadly lacking, notwithstanding numerous decisions and undertakings to do so."
Keeping skills
Sunspace is involved in low-earth orbit satellite development, design, building, integration, testing and commissioning. However, it is undercapitalised and was unable to pay creditors. Without government support, Sunspace could not grow and prosper.
The DST says the offer is in line with a Cabinet decision that the satellite manufacturing company be absorbed into the South African National Space Agency (SANSA). SANSA has entered into an agreement with Denel Dynamics to house the Sunspace capability.
As part of the process of absorbing Sunspace's capability within an appropriate entity, the company's employees have been offered employment in the new business unit, and most of them have accepted the offer. "In this way, SA will retain the critical home-grown capacity developed by Sunspace," says the department.
The department had repeatedly indicated its willingness to invest in the satellite maker, and, in March 2011, Cabinet approved a deal that would see the state take up between 55% and 60%, allowing Sunspace to lean on government to fill its order books, at an estimated cost of R100 million.
However, on 23 October, in response to Parliamentary questions, Hanekom said government investment was contingent on Sunspace presenting a viable business case to demonstrate its long-term sustainability.
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