JOHANNESBURG - Sasol shares declined after it announced a new black- and employee-ownership transaction and said it may sell shares to fund about R12bn ($903 million) of obligations related to a prior plan that ends in 2018.
The proposed new Khanyisa structure will result in about 25 percent black ownership of its South African unit, the world’s biggest producer of fuel from coal said in a statement Wednesday.
The Johannesburg-based company sees an equity issuance through an accelerated bookbuild as the optimal solution to finance commitments related to the previous plan, Chief Executive Officer Bongani Nqwababa said in a presentation in Johannesburg. The obligations may amount to about 12 billion rand.
Sasol fell as much as 5.9 percent to 375 rand a share, the biggest intraday decline since June 2016, and traded at 376 at 10:21 a.m. in Johannesburg. That compared with a 0.4 percent decline in the FTSE/JSE Africa All Share Index.
South Africa’s empowerment regulations require companies to obtain shareholding by those excluded from the economy under the apartheid, or whites-only rule, that ended in 1994. Investors in the previous black-economic empowerment transaction, Inzalo, won’t receive a distribution of ordinary Sasol shares based on the current trading price but will have the option to participate in Khanyisa, the company said.
Sasol must ensure that the Inzalo groups settle their debt of about 12 billion rand, the company said in a presentation on its website. The producer plans to purchase the Inzalo shares and cancel them, and inject any additional funds required to settle costs and any shortfall, it said.
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The company will consider a sale of shares in an accelerated bookbuild to fund those obligations and minimize the risk to its investment-grade credit metrics, the presentation said. The new structure will include employee share-ownership plans and investors in the Inzalo plan will have the opportunity to participate, the company said. Sasol will be providing “notional and other vendor funding” for Khanyisa, it said. When Inzalo was set up, some of the funding came from third parties.
The Khanyisa transaction has an indicative estimated cost of 7.3 billion rand and would increase the weighted average number of shares by 6 percent, based on certain assumptions, the statement said.