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Sasol is considering additional divestments, including the potential sale of stakes in an African gas pipeline and a Middle Eastern plant, as it explores ways to reduce its $10 billion debt pile, people with knowledge of the matter said.
South Africa’s biggest company by revenue is working with advisers to review its 49% stake in Oryx GTL, which runs a gas-to-liquids plant in Qatar, according to the people. It is also weighing options for its upstream business Sasol Exploration & Production International as well as its 50% holding in the Rompco gas pipeline, the people said, asking not to be identified because the information is private.
Sasol is examining various avenues to shore up its finances as it grapples with pressure from creditors. The company hired Bank of America to find a buyer for a minority stake in its $13 billion Lake Charles chemical complex in the US, Bloomberg News reported last month.
The shares jumped as much as 7.7% to R79.68 on Thursday evening, the most in 10 days. By 11:20 on Friday morning they were trading at R77.81.
Sasol has also discussed plans for a potential rights issue and has been negotiating with lenders to arrange greater flexibility over repayments. Sasol is still considering a number of possibilities and hasn’t decided whether to proceed with the additional divestments, the people said.
Cost overruns
Sasol started an asset review process in 2017 that has expanded to other measures designed to reposition the company over the next two years, the company said in an emailed statement.
"The expanded asset disposal process has yielded good interest in relation to a number of assets, despite the macro environment uncertainty," Sasol said, declining to elaborate further. "Updates on progress will be provided at the appropriate time."
Sasol is planning to repay at least $6 billion (R110bn) of debt by the end of June 2021. The company said in March it will examine potential asset sales before deciding to pursue a rights issue, which it said would be a "last resort". Cost overruns and time delays at the Lake Charles project led to mounting borrowings and contributed to a collapse in Sasol’s share price over the past year.
Oryx GTL is controlled by state-owned Qatar Petroleum. The flagship plant, launched in 2007, uses Sasol technology that converts natural gas to liquid fuels. Rompco operates an 865km pipeline that transports natural gas from onshore fields in Mozambique to a Sasol plant in South Africa.
Sasol Exploration & Production International oversee the group’s upstream oil and gas operations. The unit is mainly focused on Mozambique, where it has spent more than $10 billion on capital projects and operating expenditures. The business also has operations in South Africa, Canada, Gabon and Australia.
