Sasol drops R13bn plan for BEE debt

Sasol abandoned a plan to sell about R13 billion of shares in order to repay debt owed by investors who participated in a transaction to boost black ownership of the company.

Sasol transferred a stake to about 250 000 black investors in 2008, in a black economic empowerment deal. The transaction was partly financed through the issue of preference shares to banks, which the investors will have to repay next year as the deal unwinds. A decline in the company’s stock since mid-2014 means their equity won’t cover that debt, leaving Sasol on the hook for the more than R12 billion they owe, plus transaction costs.

Sasol won’t pursue its preferred funding option announced on September 20 “of issuing up to 43 million ordinary shares through an accelerated bookbuild process” and is considering other options, the company said yesterday.

The new funding plan will be announced in February. “Sasol’s intention is to mitigate the amount of shareholder dilution, while still maintaining Sasol’s investment-grade credit rating.”

When the Inzalo transaction unwinds next year, those investors will have the option to participate in Sasol’s next leg of empowerment, Khanyisa, which is aimed at taking black ownership of its SA unit to 25%.

Alternatives are being sought “following extensive engagement with shareholders,” it said. – Bloomberg

Sasol’s intention is to mitigate the amount of shareholder dilution.