JOHANNESBURG - Sasol tumbled the most in 15 months after the biggest producer of fuel from coal said it may sell about R13billion 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 250000 black South Africans who participated in the Inzalo transaction in 2008, and forces Sasol to settle the about R12bn they owe. An equity issuance is the best financing solution, chief executive Bongani Nqwababa said on Wednesday.
Sasol fell as much as 7.6percent, the biggest intraday decline since June 2016, and traded down 6.7percent at R371.75 at 3.47pm in Johannesburg.
The potential book build is “the biggest driver right now,” Wade Napier, an analyst at Avior Capital Markets, said. South Africa has set targets for black ownership as it seeks to redress the economic inequalities stemming from white-minority rule 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 25percent.
Sasol will hold a shareholder meeting in November for investors to approve the proposals for unwinding Inzalo, selling shares and creating the Khanyisa structure, with an element of employee ownership.