Sasol cuts debt burden by R63.4bn

Petro-chemical multinational Sasol yesterday reiterated its decision not to pursue a rights issue, as the group made headway in slashing its debt burden by just more than a third (or R63.4 billion) for its half-year to the end of December.

Sasol published its latest results on the JSE, which showed that the group’s total debt at the end of its interim period stood at R126.3 billion, compared to R189.7 billion as at 30 June 2020 (full-year).

This is a notable cut within just six months, which comes largely on the back of the 50% sale of its Lake Charles Chemicals (mega) Project (LCCP) in the US.

It has also meant the group has avoided a dilutive new rights issue, which was one of the options it was considering to bring its ballooning debt under control.

“During the period [interim to 31 December 2020], we utilised proceeds from our asset divestments to repay the US dollar syndicated loan, as well as a portion of our revolving credit facility, reducing our US dollar denominated debt by almost R28 billion [US$2 billion] to R121 billion [US$8.2 billion],” Sasol pointed out in its Sens results statement.

“Through our comprehensive response plan and planned asset divestments, we intend to further reduce our net debt to achieve a net debt: Ebitda [earnings before interest, taxes, depreciation, and amortisation] ratio of less than 2.0 times and gearing of 30% by 2023,” it added.

“Our gearing decreased from 114.5% at 30 June 2020 to 76% at 31 December 2020 mainly due to repayment of US dollar debt [20%] and a stronger closing rand/US dollar exchange rate [7%],” Sasol said.

Sasol noted that its “decision not to pursue a rights issue” comes amid the current macroeconomic outlook and “the significant progress” it has made in its response plan initiatives.

“The balance sheet deleveraging pathway will continue to be prioritised to ensure that we operate within our financial covenants and maintain adequate liquidity headroom, while delivering the Sasol 2.0 transformation programme,” it said.

Sasol did not declare an interim dividend.

The group said that it had “delivered a good set of results” for the six months ended 31 December 2020, with earnings increasing by more than 100% to R15.3 billion from R4.5 billion in the prior period.