Sasol on Monday announced that it would explore different funding options to settle the financing obligations of its failed broad-based black economic empowerment (BBBEE) ownership structure.
Sasol said it will no longer pursue the preferred funding option of issuing up to 43-million ordinary shares through an accelerated bookbuild process as it intends to mitigate the amount of shareholder dilution whilst still maintaining its investment grade credit rating.
This comes after Sasol announced last month that it will disband its 2008 BBBEE scheme, Sasol Inzalo, when it matures next year and launch the R21-billion Khanyisa empowerment scheme.
Sasol Khanyisa is intended to achieve effective direct and indirect BBBEE ownership of at least 25% in Sasol South Africa, a wholly-owned subsidiary of Sasol.
Eligible participants in Sasol Khanyisa will comprise Sasol’s qualifying employees, existing Sasol Inzalo Public and Groups shareholders, and existing black Sasol shareholders that own shares listed on the empowerment segment of the JSE.
Sasol Inzalo scheme failed to deliver on the desired outcome and profits for shareholders over ten years despite being one of the biggest BBBEE transactions in South Africa with over 200 000 previously-disadvantaged shareholders holding 16.1-million ordinary shares.
A significant amount of the funding to facilitate Sasol Inzalo was obtained through the issue of preference shares to external banks to facilitate the acquisition of Sasol preferred ordinary shares.
These shares would now need to be sold in the market by the Inzalo Fund companies in order to fund the redemption of the preference shares and cumulative dividends. However, the company said, this would not be sufficient to satisfy these obligations and would create a funding shortfall of between R2-billion and R3-billion.
Sasol had initially indicated that its preferred funding option would be to undertake an accelerated bookbuild of up to 43-million ordinary shares to raise enough money to repurchase the relevant preferred ordinary shares and settle the obligations and associated costs of the Inzalo Fund companies.
Sasol said it would communicate its final plan for settling the Inzalo Fund companies’ debt in February 2018.