Denel Aerostructures, a member of the Denel Group, manufactures parts for Airbus Military's A400M airlifter.
"The recapitalization is a vital strategic investment in a company that is at the forefront of high-tech manufacturing and advanced technology in South Africa," said Denel Aerostructures Chief Executive Officer Ismail Dockrat.
"The skills and experience accumulated in DAe can be the basis for the future growth of the local aerospace and aviation sectors.
"This decision supports (the) government's industrial policy objectives of deepening aerospace advanced manufacturing capability in South Africa."
Notice of the funding allocation came in a budget announcement from the country's Ministry of Finance. The budget statement said the Denel Group as a whole had made progress on a turnaround strategy in 2005, but "… its solvency position continues to pose serious challenges."
"We concur with the (finance) minister's observation and believe that we will address the challenges noted and critical to reposition Denel specifically with regards to its order revenue stream to ensure its medium to long-term sustainability and profitability," the Denel Group said.