- CEO Pat Davies discusses Sasol's R17,9-billion empowerment deal (10/09/2007) (4.33 MB)
Petrochemicals giant Sasol unveiled South Africa's largest black economic empowerment (BEE) transaction to date, announcing plans to sell 10% in the company to black investors, in a R17,9-billion deal.
CE Pat Davies said on Monday that the company wanted “as many black South Africans as feasibly possible” to become shareholders.
The company came under heavy criticism from government in recent years, for what the State viewed as dragging its feet in implementing transformation.
Sasol planned sell a 3% stake in the company to the South African black public, 1,5% to selected BEE groups, 4% to Sasol employees and 1,5% to the Sasol Foundation.
Almost 27 000 Sasol staff would be allocated shares in terms of a significant employee share ownership scheme, being done in consultation with Sasol's trade unions.
The transaction would be funded by a combination of equity, third party funding and facilitation by Sasol, CFO Christine Ramon said, adding that the company would externalise as much debt as possible.
Sasol would make the shares available in an affordable manner, and, to mitigate the effect of potential dilution of interest held by existing shareholders, Davies said that the company would embark on a share buy-back programme.
He also said that participants would immediately have full economic and voting rights.
“Participants wont be neglected for the first ten years, and only start benefiting after ten years. They will have all economic rights,” Davies said at a presentation in Johannesburg.
Black groups would be requested to express their interest in participating in the transaction as selected partners, and a request for an expression of interest would be published in the national media next week.
Full details of the BEE transaction would be announced in the first half of 2008, when the transaction would be proposed to Sasol’s shareholders.
This would include details of the process that qualifying persons should follow to participate in the employee share scheme and the black retail public offer.
“This transaction is ground-breaking, not only in terms of its size, but also in terms of its overarching ambition to create a legacy of building skills and capacity in the South African economy,” said Sasol chairperson Pieter Cox said in a statement.
Skills development and capacity building would be the central theme of the BEE transaction.
"Sustaining the strong economic growth of the past decade is largely dependent on providing the majority of South Africans with the opportunity to develop relevant skills needed to build our nation. Sasol intends to be part of this effort. An enhanced skills base will also be needed to execute Sasol's growth strategy, particularly as we move ahead with developing new synthetic plants in South Africa and elsewhere in the world," Cox said.
A Sasol Foundation would be created to contribute in a meaningful way to growing South Africa's skills, particularly in science and technology.
Details of the foundation's activities still remained to be finalised, but Sasol said that it would engage in projects that would benefit historically disadvantaged communities throughout the country. Communities near Sasol's operations in Sasolburg and Secunda, as well as women's groups would also be targeted as beneficiaries.
Last year, Sasol concluded a R1,45-billion BEE deal with Tshwarisano, which acquired a 25% shareholding in Sasol's liquid-fuels business housed in Sasol Oil. It was also involved in empowerment deals in its mining division.
Trade union Solidarity has given Sasol’s “turbo-empowerment deal” the thumbs up.
Deputy general secretary Dirk Hermann said that the employee share ownership plan (Esop) was the largest yet in South Africa, following hot on the heels of Anglo American which announced a R3,3-billion Esop last week.
AngloGold Ashanti announced a similar scheme to the value of R1,1-billion, while plans by Impala Platinum and Kumba Resources were worth R1,7-billion en R500-million, respectively, he said.
“Apart from the fact that employees from the group will derive most benefit from the deal, it is also seen as a positive aspect that poor black communities will be able to obtain shares and that a small wealthy black elite will not be able to grab all the shares,” Hermann said.