Sasol prepares to bank Lake Charles proceeds


Sasol prepares to bank Lake Charles proceeds

Published Date: 2020-12-03 | Source: Stephen Gunnion | Author: Stephen Gunnion

Sasol prepares to bank Lake Charles proceeds

The energy and chemicals group says it has also successfully concluded talks with its lenders to keep its amended debt covenant in place.

Sasol has wrapped up the sale of a 50% interest in its base chemicals business at Lake Charles in the US to LyondellBasell Industries after shareholders approved the deal last month. And it says the money should be in the bank any day now.

In an update on the new joint venture with LyondellBasell, the energy and chemicals group said the transaction closed on Monday, with the $2 billion in proceeds expected within two days of closing. Under the terms of the deal, LyondellBasell will operation the JV assets and market the polyethylene products on behalf of the two shareholders. The transaction excludes Sasol's US performance chemicals business as well as its legacy base chemicals operations in that country.

Sasol said it had also successfully concluded discussions with its lenders on its debt covenant amendment for the end of the month, which is 4x net debt to EBITDA (earnings before interest, tax, depreciation and amortisation). It said the covenant calculation wouldn't be impacted by once-off events or delayed receipt of disposal proceeds that are expected by year end. The covenant for next June remains at 3x net debt: EBITDA.

Last week the group announced the disposal of another investment as it reorganises its operations and pays down debt. It sold its 50% stake in the Gemini high-density polyethylene joint venture in the US to its partner INEOS for $404 million (R6.2 billion).

According to Reuters, chief financial officer Paul Victor told an investor call yesterday afternoon that the company aims to cut annual capital expenditure by 30% and reduce costs over the next three to four years as part of its turnaround strategy and as it adapts to an oil price of about $45 per barrel.

Sasol's shares rose 4.4% to R122.39 yesterday, assisted by a 2% rise in the price of Brent crude oil.

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