Sasol to slash jobs as it reviews its business
JOHANNESBURG - Sasol planned to cut jobs and end West African oil operations as part of a business revamp, the petrochemicals producer said on Thursday, adding it had also agreed to a deal with lenders to relax borrowing rules.
Sasol has been reviewing its business as it struggles with high debt levels, falling oil and chemical prices and lower global demand due to the Covid-19 pandemic.
The company, the world’s top producer of motor fuel from coal, said the review had identified chemicals and energy as the focus areas for its future business.
“The revision of our strategy aims to have a greater focus on enhanced cash generation, value realisation for shareholders and business sustainability,” it said in a statement.
Sasol said the revamp would affect its workforce, but did not say how many jobs might be lost. The company said it was seeking consultations with trade unions in South Africa and aimed to do the same in other countries.
It also said it had concluded discussions with lenders, adding they had agreed to waive a debt test due this month and relax one due in December.
"Our lenders have agreed to waive the covenant at June 2020 and lift the December 2020 covenant from three times to four times net debt : earnings before
interest, taxation, depreciation and amortisation (Ebitda)," Sasol said.
The group said the additional flexibility wassubject to conditions, which were customary for such covenant amendments and consistent with Sasol’s broader capital allocation framework.
These included provisions to prioritise debt reduction at this time, such as commitments that there would be no dividend payments nor acquisitions while Sasol’s leverage was above three times net debt : Ebitda, Sasol said.
Sasol would also reduce the size of its facilities as debt levels were reduced, while continuing to maintain a strong liquidity position.
The company added its liquidity headroom would remain well above $1 billion (R17bn).