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.
Settle Debt
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.