Sasol sells Moz pipeline stake for R5bn as it pares down its debt
SASOL on Friday announced the R5 billion sale of a 30 percent stake in its Republic of Mozambique Pipeline Investments Company (Rompco) as part of its asset disinvestment programme aimed at settling debt.
The group said it had concluded a sale and purchase agreement with a consortium comprising black empowerment firm, Reatile Group, and the Ideas Fund, one of South Africa’s biggest infrastructure funds, which is managed by African Infrastructure Investment Managers, a subsidiary of Old Mutual Alternative Investments Holdings. The proposed transaction is expected to become effective during the second half of 2021.
Sasol said as part of the share sale, the consortium would make a R4.145 billion initial cash payment and a deferred payment of up to R1bn payable if certain agreed milestones were achieved by June 30, 2024.
Sasol said it would retain a 20 percent shareholding in Rompco and would continue to operate and maintain the pipeline in terms of the commercial agreement between Sasol and Rompco, which was independent of the proposed transaction.
“Sasol’s agreements with Rompco to transport gas to Secunda are unaffected by the proposed transaction and the tariffs remain as per the said agreements, which were approved by the National Energy Regulator of South Africa (Nersa) or are approved by Nersa from time to time,” said Sasol. The transaction comes a year after Sasol unveiled several measures to cushion the impact of the low price environment due to the Covid-19 pandemic.
The measures included an accelerated asset disposal programme, a cash conservation programme, partnering options at the Lake Charles Chemicals Project (LCCP) and a potential rights issue of up to $2bn (R28bn), which was scrapped following the success of the group’s turnaround strategy.
In December, Sasol sold a 50 percent interest in the US based LCCP Base Chemicals business for $2bn to LyondellBasell, one of the world's largest plastics, chemicals and refining companies. At the end of December 2020, Sasol’s debt had come down to R126.3bn compared to R189.7bn as at June 30, 2020, after proceeds from the asset divestments were used to repay its dollar syndicated loan, and a portion of its revolving credit facility, reducing its dollar denominated debt by almost R28bn to R121bn.
Established in 2004, Rompco is a joint venture with Companhia Moçambicana de Gasoduto and South African Gas Development Company, also known as iGas focused on transporting Mozambique’s natural gas assets to markets in both South Africa and Mozambique.
The transaction is subject to approvals from authorities including the Competition Commission. “Sasol remains fully committed to its operations in Mozambique, which continue to be integral to Sasol’s gas strategy,” said Sasol.
In February, the group approved the final investment decision on the Mozambique Production Sharing Agreement with an estimated cost of $760 million.
Sasol’s share price on Friday closed 0.03 percent higher at R237 on the JSE.