Sasol Mulls $980 Million Share Sale to Repay Black-Investor DebtBy
Slump in company’s shares obliges Sasol to settle money owed
Sasol announces next phase of black economic empowerment
Sasol Ltd. tumbled the most in 15 months after the biggest producer of fuel from coal said it may sell about 13 billion rand ($980 million) of shares to meet its obligation to repay debt owed by black investors.
The decline in the company’s stock since the mid-2014 slump in crude prices precludes payouts to more than 250,000 black South Africans who participated in the Inzalo transaction in 2008, and forces Sasol to settle the about 12 billion rand they owe. An equity issuance is the best financing solution, Chief Executive Officer Bongani Nqwababa said in Johannesburg on Wednesday.
Sasol fell as much as 7.6 percent, the biggest intraday decline since June 2016, and traded down 6.7 percent at 371.75 rand at 3:47 p.m. in Johannesburg.
The potential bookbuild is “the biggest driver right now,” Wade Napier, an analyst at Avior Capital Markets, said by phone.
South Africa has set targets for black ownership as it seeks to redress the economic inequalities stemming from white-minority rule under apartheid that ended in 1994. When Inzalo unwinds next year, those investors will have the option to participate in Sasol’s next leg of empowerment, Khanyisa, which aims to take black ownership of its South African unit to 25 percent.
The plan to purchase and then cancel the Inzalo shares, plus any associated costs, will require about 13 billion rand, Chief Financial Officer Paul Victor said. Sasol will consider other alternatives if they become more attractive than a bookbuild, the company said.
Sasol will hold a shareholder meeting in November for investors to approve the proposals for unwinding Inzalo, selling shares and creating the Khanyisa structure, which will include an element of employee ownership.
Sasol will provide “notional and other vendor funding” for Khanyisa, it said. When Inzalo was set up, some of the funding came from third parties.
— With assistance by Thembisile Dzonzi