7.4 Aerosud was a South African company. Negotiations were underway regarding the acquisition of DSA. 7.5 The non-core assets to be outsourced would include activities and portions of the manufacturing process that were not key capabilities of DSA. 7.6 The Denel group was in need of recapitalisation of about R2 billion to recover from the financial situation, in particular in relation to DSA. This emanated from a shortfall in funding received from the Department of Public Enterprises. 7.7 There are businesses internationally that have shown keen interest in entering into strategic partnerships with DSA, and the management of DSA was in continuous discussions with interested parties. They also sought political support from government to enhance the marketing efforts of the entity. 7.8 The nature of business, the business environment and the contracts of Denel posed a challenge to the entity. In most instances, financial losses were as a result of legacy contracts. 7.9 The Industrial Policy Action Plan did not provide substance on the role of Denel regarding the aerostructure sector. 7.10 The New Growth Path referred to the strengthening of the aerostructure sector in South Africa. 7.11 The absence of a defence strategy and the lack of orders from the Department of Defence and Military Veterans posed serious challenges for Denel and its business units.