Sasol has new promises...

SECOND EMPOWERMENT SCHEME: WHAT’S IN IT FOR MOST BLACK SHAREHOLDERS?

Khanyisa deal will have net value from day one, as no further capital or external debt would be required from participants – CFO.

Sasol has promised its new empowerment scheme Khanyisa will be nothing like Inzalo, which left shareholders with a debt load instead of dividend payouts.

The R28 billion Inzalo scheme launched in September 2008, allowing shareholders to own 10% of Sasol shares. When Inzalo expires in the next 12 months, shareholders may be left with no actual value, only a small portion of dividend payouts.

This depends on whether Sasol’s share price appreciates to at least R483 – which would be enough to settle the R13 billion bank debt that financed the scheme and dividend payouts to shareholders. But this is unlikely to happen.

Most Inzalo participants funded their investment through debt, from banks or Sasol. Since 2008, Sasol has paid dividends worth R7.6 billion: R5 billion to banks to service debt and R2.6 billion to shareholders.

Sasol will embark on an accelerated bookbuild to raise up to R13 billion to settle the Inzalo debt, said joint-CEO Bongani Nqwababa. This is expected to dilute Sasol shareholders by 5.1% (2008: 4% dilution). Other fundraising options will also be considered. What’s in it for shareholders this time? Khanyisa will cost Sasol R7.3 billion over ten years from 2018. Unlike Inzalo, it will be funded by Sasol and will hold a 25% stake in the SA operations.

Sasol CFO Paul Victor said Khanyisa will provide participants with value from day one, as Sasol will be giving free shares to its employees and ordinary black shareholders valued at R1.9 billion and R1 billion, respectively. This bonus means shareholders don’t have to wait for ten years to get value, he said. They can also monetise their shareholding.

Sasol has two empowerment structures that trade on the JSE with different shareholders: Inzalo (funded by debt) and Sasol BEE Ordinary shares (SOLBE1), which trades at a 13% discount to Sasol’s share price and has no debt. SOLBE1 shareholders have three options: keep their shares on the JSE, participate in Khanyisa, or convert their shares into Sasol shares.

Those opting to keep their SOLBE1 shares would receive a bonus share for every four SOLBE1 shares they hold.

If existing SOLBE1 shareholders participate in Khanyisa, they’d receive one Khanyisa share for every one SOLBE1 share held and a further SOLBE1 share for every ten Khanyisa shares held.

Inzalo shareholders would receive one Khanyisa share for every one Inzalo share held and a further one SOLBE1 share for every ten Khanyisa shares held.

Various Sasol employees would be awarded Sasol, SOLBE1 and Khanyisa shares with vesting periods of 3-10 years.

Sasol shareholders need tow approve the Khanyisa scheme and options at the AGM in November.

Riaz Gardee at Liberty said whichever option is choosen, any shareholder must be able to assume the risks inherent with investments.