Sasol announces new B-BBEE ownership structure

The new Khanyisa scheme to replace Inzalo is ‘not tied to the share price at all,’ says Sasol joint president and CEO, Steve Cornell.

NASTASSIA ARENDSE:  Sasol plans to write off about $900 million in debt that was used to bring in black investors in a 2008 deal that foundered after a fall in oil prices hit its shares. They are going to unwind the Inzalo transactions in favour of a new one, a R21 billion scheme that will run for a further ten years until 2028.

To talk to me about that I’m joined on the line by Steve Cornell, who is the joint president and CEO of Sasol. Steve, thanks so much for your time.

STEVE CORNELL:  Nastassia, always a pleasure.

NASTASSIA ARENDSE:  Tell me about this new transaction. Will it work similarly to the previous one, and what percentage of BEE investors are you looking to attract?

STEVE CORNELL:  The new mechanism and plan is called Sasol Khanyisa, and it’s a little different from Inzalo. What we’ve tried to do is learn from the good experience of a couple of other BEE transactions that we have in place. And instead of setting it up at the group level and having it tied to Sasol share appreciation as a mechanism to add value, we are actually going to do it at an operating level, or tied to the operations in South Africa, and a daily generation of profits to be able to give value to the shareholders over time.

NASTASSIA ARENDSE:  And will the participating investors get a discount in terms of the purchase of these shares?

Read: Sasol Inzalo: What went wrong?

STEVE CORNELL:  Yes, a slight discount. But, more than that, they are going to get a bonus share. What we are doing is we are inviting all of the previous participants of Inzalo to participate in the new plan. If they do that, we are going to give them one share of Sasol stock for every ten shares of the Inzalo programme that they were in. So that immediately gives them equity that they will be able to trade if they wish, and a dividend, and it will be a share that’s traded on the BEE segment of the Johannesburg Stock Exchange. So it has great liquidity.

NASTASSIA ARENDSE:  In terms of a break-even price in the next ten years when the new one unwinds, what is the share price that you would like Sasol to be at in order for you to break even?

STEVE CORNELL:  It’s not tied to the share price at all. So if the share price goes up or down that really doesn’t determine the value. What determines the value is if we are able to run our business and make our products and sell those to our customers and generate a profit. Then we’ll take some of that profit of the business here in South Africa and we are going to give that to the participants of this programme.

NASTASSIA ARENDSE:  We’ll have to leave it there. Steve, thanks so much for your time.

STEVE CORNELL:  You are most welcome. Thank you for the interest.

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