Bloomberg
Sasol, the world’s largest maker of fuel from coal, abandoned a plan to sell about R13-billion of shares in order to repay debt owed by investors who participated in a transaction to boost black ownership of the company.
Johannesburg-based Sasol transferred a stake to about 250 000 black investors in 2008 in a black economic empowerment deal. The transaction was partly financed through the issue of preference shares to banks, which the investors will have to repay next year as the deal unwinds. A decline in the company’s stock since mid-2014 means their equity won’t cover that debt, leaving Sasol on the hook for the more than R12-billion they owe, plus transaction costs.
Sasol won’t pursue its preferred funding option announced on September 20 “of issuing up to 43-million ordinary shares through an accelerated book-build process” and is considering other options, the company said in a statement. The new funding plan will be announced in February.
“Sasol’s intention is to mitigate the amount of shareholder dilution whilst still maintaining Sasol’s investment-grade credit rating.”
South Africa has set targets for black ownership as it seeks to redress the economic inequalities stemming from white-minority rule under apartheid that ended in 1994. When the so-called Inzalo transaction unwinds next year, those investors will have the option to participate in Sasol’s next leg of empowerment, Khanyisa, which is aimed at taking black ownership of its South African unit to 25%.
Sasol’s stock fell the most in 15 months after the announcement of the share-sale plan on September 20. Alternatives are being sought “following extensive engagement with shareholders,” it said.