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Sasol - further cautionary announcement
Shareholders of Sasol (Shareholders) are referred to various cautionary announcements regarding Sasol’s expanded and accelerated asset disposal programme and the rights issue, with the last cautionary announcement released on the Stock Exchange News Service on 17 August 2020.
Shareholders are advised to continue exercising caution when dealing in the Company's securities until further particulars on the US Base Chemicals partnering process are published.
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Sasol - Lake Charles Chemical Complex update
Noteholders are referred to the recent announcement released by the Guarantor on 21 September 2020 regarding an update on Sasol’s Lake Charles Chemical Complex. The announcement may be viewed or downloaded on the following link:
senspdf.jse.co.za/documents/SENS_20200921_S436391.pdf
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Sasol - Lake Charles Chemical Complex update
Hurricane Laura made landfall on 27 August 2020 near Sasol’s Lake Charles Chemical Complex in Southwest Louisiana, and is one of the strongest hurricanes on record to hit the United States. Significant property and utility infrastructure damage has been experienced across the region.
Sasol’s more than 800 Lake Charles employees are safe; however, hundreds of employees have suffered significant damage to their homes and remain in temporary housing while utility restoration and repair work is in progress. Sasol is assisting employees with home preservation, essential supplies and financial aid. In addition Sasol is supporting the local authorities, utility partners and citizen groups in community and infrastructure recovery efforts.
Sasol has completed damage assessments of the complex’s 14 manufacturing facilities and associated utilities and infrastructure. While there was moderate wind damage to cooling towers and some insulation and building damage, there is no apparent damage to major process equipment, utilities or infrastructure. This will need to be confirmed once site electrical power is completely restored and all systems are tested.
Removal of debris, repair work and startup planning continue on the site. Regular employee work shifts have resumed, and several hundred contractors are working on site to expedite readiness for startup.
The critical path for operational restart is the re-establishment of reliable external electrical power service from Entergy, the regional power provider. The Sasol Lake Charles site is currently partially energized. Entergy expects full load service, industrial-level reliability power, to be available to Sasol and other industrial customers in the area by early-to-mid October.
Some site utility systems are currently online, with startup of the remaining utilities planned before reliable power is enabled. Once Entergy declares reliable, full load power is restored, Sasol will activate a coordinated startup of the site’s two ethane crackers, and derivative units.
The low-density polyethylene unit, the last of the Lake Charles Chemicals Project units to come online, did not experience any significant storm impacts and commissioning activities have resumed. The unit’s beneficial operation sequence will be initiated once the site is fully energized.
Sasol has Atlantic Named Wind Storm (ANWS) insurance coverage for units under construction as well as operating units.
Sasol’s progress toward securing a partner in its U.S. Base Chemicals business is far advanced, and was not impacted by Hurricane Laura.
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Sasol - disposal of Air Separation Units Business
Sasol refers its shareholders to the Stock Exchange News Service announcement of 29 July 2020, which informed the market that Sasol South Africa Limited (SSA), a major subsidiary of Sasol, had signed an exclusive negotiation agreement with Air Liquide Large Industries South Africa Proprietary Limited (Air Liquide) for the sale of SSA’s sixteen air separations units and associated business located in Secunda.
Sasol is pleased to announce that negotiations with Air Liquide have been concluded and a sale of business agreement (the Sale Agreement) has been entered into, under which SSA shall dispose of its air separation business located in Secunda, (the Business) to Air Liquide (the Transaction) subject to the suspensive conditions outlined below.
Air Liquide is a world leader in gases, technologies and related services, and operates in 80 countries with approximately 67 000 employees. Air Liquide has provided technical and engineering support to Sasol in Secunda since 1979.
Description of the Business
The Business comprises the sixteen air separation units (ASUs), and related assets with a combined capacity of up to 42 000 tons of oxygen per day, that provide oxygen for Sasol’s fuels and chemical production processes in Secunda. The ASUs produce various other gases utilised at Secunda, and rare gases sold externally. Employees related to the Business will transfer to Air Liquide as part of the arrangement. Subsequent to the Transaction, Air Liquide will supply various gases to SSA’s operations under a long-term gas supply agreement (Gas Supply Agreement) with an initial term of 15 years. It is anticipated that Air Liquide’s expertise would allow, in coordination with Sasol, a targeted reduction in greenhouse gas (GHG) emissions associated with oxygen production over time. In addition to the Sale Agreement and the Gas Supply Agreement, SSA and Air Liquide (the Parties) have also concluded various ancillary service, lease and like agreements (collectively the Transaction Documents). This includes an agreement for Sasol to sell key utilities to Air Liquide, to enable continuous gas production.
Suspensive conditions to the Transaction
The Disposal is subject, inter alia, to the following key suspensive conditions:
- Approval by the Competition Authorities;
- Provision by Sasol Limited of a guarantee in favour of Air Liquide, as security for SSA’s obligations to Air Liquide under the Sale Agreement and selected obligations under the Gas Supply Agreement; and
- to the extent applicable, approval by the South African Reserve Bank of the implementation of the Sale Agreement and the Transaction Documents (collectively the Suspensive Conditions).
Implementation and Effective Dates of the Transaction
The implementation and effective date of the Transaction shall fall ten business days
after the date on which the Suspensive Conditions are fulfilled or waived, as the case
may be, but will not be earlier than 1 December 2020.
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