Sasol drops again after unveiling plan to tap shareholders for up to R33bn
The company, which is battling R162bn in debt because of its US chemical project, is seeking to raise about R89bn through various initiatives
Sasol's shares plunged another 16%, taking its 2020 decline towards R90bn, as it unveiled plans to raise as much as $6bn (about R98bn).
Those plans include tapping investors for $2bn as it battles to stabilise a balance sheet under strain from plummeting oil prices.
The group intends to convene a general meeting in July to receive approval for a rights offer that may exceed its market capitalisation, which was just R24bn as of Tuesday morning. The group is also planning to cut capital expenditure and renegotiate credit terms with lenders.
The energy company has said it has been hit by an “unprecedented set of combined challenges” driven by the spread of the coronavirus pandemic and the decline in the oil price due lower levels of global travel and an oil dispute between Saudi Arabia and Russia.
This comes as the company has reached peak debt levels as it finishes its US Lake Charles chemicals project, which has run 45% over budget and seen the company struggle to keep up with payments on R121bn in debt. Ratings agency Moody's Investors Service downgraded the group’s long-term debt to junk earlier in March.
Sasol said on Tuesday it was confident it would be able sustain a liquidity headroom in excess of $1bn over the next 12-18 months, with a $25 a barrel oil price, before the benefits of hedging.
The group is planning to accelerate disposals, and said on Tuesday it was seeking to generate $6bn through its various initiatives by the end of its 2021 financial year.
“In this dynamic and challenging environment, it’s critical that we tighten control on what we can, acting both swiftly and decisively,” said CEO Fleetwood Grobler.
By 11.12am, Sasol’s share price had fallen 15.29% to R37.57. Its 2020 decline compares with 28% for the JSE all share index, which has plummeted with global peers on concern that the virus outbreak will bring the world economy to a halt.
With Lisa Steyn