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Sasol - divestment announcement
On 10 September 2020, we informed the market that Sasol South Africa Ltd. ("SSA"), a major subsidiary of Sasol, had concluded a sale of business agreement (the "Sale Agreement") with Air Liquide Large Industries South Africa (Pty) Ltd. ("Air Liquide") under which SSA would dispose of its ASUs located in Secunda to Air Liquide ("the Transaction") subject to certain suspensive conditions.
Sasol is pleased to announce that the Competition Tribunal (“the Tribunal”) approved the Transaction in their ruling following a hearing held on 8 June 2021. This concludes the final outstanding suspensive condition before implementation of the Transaction. The Tribunal granted the approval subject to various conditions relating to future ownership of the ASUs by Air Liquide, including joint procurement of renewable power up to 900 megawatts and decarbonisation investments by Air Liquide. Furthermore, ensuring no negative impact on employment, various commitments on Broad-Based Black Economic Empowerment and support for localisation and small, medium, micro and black owned enterprises.
All the suspensive conditions to the Transaction have now been fulfilled. In line with the terms of the Sale Agreement, the transaction will close on or before 10 business days from the competition tribunal approval date with the proceeds of R5,525 billion and EUR148,75 million (to be settled in US dollars) settled at closing. The proceeds, net of tax obligations related to the Transaction, will be utilised within the Sasol Group to repay debt. Further detail related to the financial impact of the Transaction will be included in Sasol’s annual reporting for financial year 2021.
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Sasol - restructuring of existing oil hedges
Sasol has made significant progress in deleveraging its balance sheet following a strong operating performance in a more supportive macroeconomic environment, continuing cash conservation measures and ongoing asset divestments. One of the Company’s main objectives remains to reduce absolute debt levels, which will trigger the consideration to resume dividend payments. Debt metrics are currently following a positive trajectory but may still be negatively impacted by oil price volatility.
The current hedging program consists mainly of put options and provides protection against oil prices decreasing to below approximately USD43.11 per barrel. Following the recent material rise in the oil price, Sasol has been able to restructure and enhance its financial year 2022 hedging programme, ensuring cash flow robustness and protection against future oil price volatility.
The existing oil put hedges of 24 million barrels for financial year 2022, as reported in the Production and Sales Metrics ending 31 March 2021, have been restructured and replaced by a zero cost collar hedging structure. This has allowed the Company to increase the gross average floor oil price on the existing 24 million barrels from USD43.11 per barrel to approximately USD60.09 per barrel, albeit with a cap of approximately USD71.97 per barrel. The premium paid on the original put options for financial year 2022 will be realised as an expense of approximately USD30 million to USD34 million, reflecting the cancelled options and new hedges which were executed in terms of the updated hedging strategy.
The oil hedge cover ratio for financial year 2022 has also been increased by hedging an additional 18 million barrels or an incremental 4.5 million barrels per quarter. This was achieved by increasing the hedge cover ratio from 80% to 90% of total Synfuels synthetic crude oil production, and including 90% of Sasol’s share of Oryx production and equivalent commodity chemicals volumes where there is a strong correlation to oil price.
The incremental 4.5 million barrels for quarter one to three of financial year 2022 have been executed using swaps at an average strike level of USD67.52; USD67,03 and USD67.21 per barrel respectively. Completion of the last 4.5 million barrels for quarter four is still in progress. The actual realised chemical margins for the base chemical sales volumes for financial year 2022 will be unaffected by this hedging program.
The updated hedging levels underpin the strengthening of the balance sheet and the reduction of the Company’s absolute debt levels. The restructuring was focused on financial year 2022 only. The Company will however continue to update the market on any changes to our financial risk management positions in our quarterly market disclosures.
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Sasol Ltd. - Dealings in securities by directors o
Sasol Ltd. - Dealings in securities by directors of major subsidiaries of Sasol
SENS Announcement Classification:
1. Dealings
2. by Director of Subsidiary
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