CAPE TOWN – Sasol has entered into new $1.8 billion (R26.86bn) dollar-denominated senior unsecured credit facilities that will be used to refinance in full the outstanding Lake Charles Chemical Project asset-finance loan, a statement said on Friday.
The facilities comprise a $1.65bn five-year term loan facility and a $150 million revolving credit facility.
Sasol, the biggest maker of liquid fuels from coal, said late last month that the capital cost of the Lake Charles Chemical Project had increased by between $1bn and $1.3bn to between $12.6bn and $12.9bn. This was as a result of oversights in how an earlier estimate had been calculated and additional events and remaining work.
In the last year to December 31, 2018, Sasol’s gearing increased to 48.9 percent from 38 percent at the end of the previous year. Net debt stood at R115.47bn, up 22 percent from R94.55bn the previous year end.
The group had set itself a target in 2017 of keeping gearing between 20 percent and 40 percent, and that gearing would peak temporarily at 44 percent by the end of 2018, a target that was exceeded.
Sasol’s share price rose 3.57 percent to close at R379.45 on Friday on the JSE, which an analyst said was probably more to do with the rand weakening than the new financing arrangement. The rand fell as much as 1.2 percent on Friday, and traded 0.6 percent weaker at 15.09 per dollar around 12pm in Johannesburg, bringing its decline last week to more than 3 percent.
Sasol’s share price represented an almost 6 percent respite from the low levels that it traded at, after falling a whopping 18 percent to R353.55 per share on May 22, the day it announced the Lake Charles cost overruns.
Last Monday, Sasol announced the beneficial operation of its new ethylene oxide production facility at the Lake Charles Chemical Project.
The combined ethylene oxide/ethylene glycol unit is the second of the seven LCCP production facilities to come online - the other five manufacturing units were expected to come online throughout this year and in 2020, according to the Sasol website.
The project consists of a 1.5 million ton per year ethane cracker, and the downstream chemical units under construction near Lake Charles, Louisiana in the US, adjacent to Sasol’s existing chemical operations.
Once commissioned - it was 88 percent complete by June 30, 2018 - the petrochemicals complex was expected to almost triple Sasol’s chemical production capacity in the US, enabling it to further strengthen its position in the growing global chemicals market.