Sasol's headquarters in Rosebank, Johannesburg. Picture: FINANCIAL MAIL
Sasol's headquarters in Rosebank, Johannesburg. Picture: FINANCIAL MAIL

Sasol shareholders approved on Friday the group’s new R21bn black empowerment scheme, Sasol Khanyisa, designed to replace the maturing Sasol Inzalo scheme and provide 25% permanent black-equity ownership of the local businesses.

Because of fluctuating oil prices, which hit Sasol’s share price, Sasol Inzalo shareholders were unable to realise a cash profit at the end of the 10-year lock-up period because Sasol’s share-price appreciation was inadequate to repay the loans to set up the scheme.

At Friday’s general meeting, Inzalo shareholders asked Sasol executives to explain how Khanyisa would be less disappointing than Inzalo. One shareholder said he had put R100,000 into Sasol Inzalo 10 years ago and had lost everything.

Other shareholders asked why they were receiving no incentive to exchange Inzalo shares for Khanyisa shares and why the Khanyisa lock-up could not be five rather than 10 years.

They also complained that although their dividends were only a few rand, they were subject to taxation. Bongani Nqwababa, the joint CEO, said that unlike Inzalo, Khanyisa was underpinned by Sasol’s South African assets — synfuels, chemicals and gas — which were mature, cash-generative and less dependent on fluctuations in the oil price than the share price, which underpinned Inzalo.

Chief financial officer Paul Victor said Inzalo shareholders had not lost everything.

They were being offered the option to convert into Khanyisa shares and if they did they would receive 10 bonus Solbe1 shares, which were immediately tradeable on the black segment of the JSE.

Shareholders holding Solbe1 shares who elected to participate in Khanyisa could swap on a 1:1 basis, and for every 100 shares they held they would receive 35 immediately tradeable bonus Solbe1 shares.

Victor said Khanyisa would mature as soon as debt was repaid or at the end of 10 years, whichever was earlier.

Most of the debt was likely to be repaid in the first five years and the value would accumulate after that period, he said.

Nqwababa said the issue of tax on small amounts of dividends would be raised with the Treasury.

The meeting on the Khanyisa proposals followed the annual general meeting, at which shareholders queried issues such as Sasol’s noncompliance with air quality standards; the spike in fatalities in 2017; adequacy of housing provision; and altered performance targets for management rewards.

Joint CEO Steve Cornell said that although in other countries air quality regulations allowed older plants to phase in compliance, in SA this could only done by applying for postponements.

Sasol fully complied with its licence conditions, which had allowed five-year postponement of compliance for older plants, and it was working to see if its 50-year-old plants would be able to comply with the new standards by 2025.

Nqwababa said Sasol was different from most mining companies as most employees lived close to its operations. Its migrant workers wanted to retain their primary residences in their home areas. Sasol intended to provide about 1,000 houses over the next 10 years.

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