Sasol, which operates in 32 countries, said it expected that half-year headline earnings per share to December would likely fall by 20 percent. Photo: Dimpho Maja/African News Agency (ANA)

JOHANNESBURG – Sasol, the JSE-listed global chemical and energy giant, on Monday warned of a 20 percent slump in its half-year headline earnings per share (Heps) to December as it announced that it had enhanced its liquidity after securing a $1 billion (R14.70bn) loan from its lenders.

Sasol, which operates in 32 countries, said it expected that half-year Heps to December would likely fall by 20 percent, or R4.65, compared with R23.25 for the period to December 31 last year.

It said earnings per share (EPS) were also expected to decrease by at least 20 percent, or R4.78, compared with EPS of R23.92 to December 31, 2018.

“Our results for the six months ending December 31, 2019, may be further affected by adjustments resulting from our half year-end closure process,” said Sasol.

Sasol, whose former joint chief executives Bongani Nqwababa and Stephen Cornwell stepped down last month amid the troubles at its $13bn US-based Lake Charles Chemicals Project (LCCP), said it had taken steps to address its liquidity.

“The company has taken a number of actions consistent with its ongoing commitment to balance sheet flexibility, access to liquidity, and maintaining an optimal funding mix,” the group said.

Sasol said it had put in place incremental liquidity through a $1bn syndicated loan facility with Bank of America, Citibank, Mizuho Bankand MUFG Bank of up to 18 months and two bilateral facilities with a combined quantum of $250 million, and a tenor of two years. 

“These facilities enhance the company’s US dollar liquidity position during the peak gearing phase as the LCCP ramps up. These incremental facilities should not affect Sasol’s net debt position,” the company said.

Sasol said these new facilities were consistent with its existing revolving credit facility and dollar term loan facility. The group said the covenant was set at three times net debt: earnings before interest, taxation, depreciation and amortisation. 

“However, across all of these facilities, the lenders have agreed that for the financial reporting periods ending December 2019 and June 2020 the covenant will increase to 3.5 times.”

Sasol said it remained committed to its investment-grade credit rating. 

“Sasol is currently rated BBB-/A-3 and Baa3/P-3 by S&P and Moody’s, respectively,” it said.

Last month, the company said it had completed a review of its LCCP, which considered the root causes of the delay and cost overruns of the project.

The board found that the primary responsibility for shortcomings in relation to LCCP lay with the former leadership of the project management team. It said the team had been involved in inappropriate conduct and demonstrated a lack of competence, and was not transparent. 

“However, on balance, the board finds that there is not sufficient evidence to conclude that these individuals acted with an intent to defraud,” said the group.

Sasol shares closed 0.31 percent lower at R281.73 on the JSE on Monday.