Hedge plan to pro­tect against oil price

The Star Early Edition - - COMPANIES -

SA­SOL is con­sid­er­ing hedges to pro­tect against lower oil prices even as the de­cline to the weak­est in four years poses no threat to debt of the world’s big­gest pro­ducer of mo­tor fuel from coal. Act­ing chief fi­nan­cial of­fi­cer Paul Vic­tor said yes­ter­day: “We have not hedged dur­ing the past few years as share­hold­ers want ex­po­sure to oil-price move­ments, our gear­ing is neg­li­gi­ble and we have sub­stan­tial sur­plus cash.” The company is “con­sid­er­ing an oil hedge for down­side risk pro­tec­tion”. A global glut has con­trib­uted to a 22 per­cent de­cline in the price since Septem­ber. Bor­row­ing costs for Sa­sol, whose rev­enue is linked to the dol­lar price of crude, have in­creased, with yields on its dol­lar debt due Novem­ber 2022 ris­ing 26 ba­sis points to 4.39 per­cent. Sa­sol ex­pects the Im­pumelelo and Shon­doni coal mines, part of a R14 bil­lion mine-re­place­ment pro­gramme, to be­come op­er­a­tional next year. It had ar­ranged a loan with FirstRand’s Rand Mer­chant Bank at mar­ket-re­lated terms, he said. Shares fell 2 per­cent to close at R524.51 yes­ter­day. – Bloomberg

Newspapers in English

Newspapers from South Africa

© PressReader. All rights reserved.