CFO Paul Victor says that the sale of these assets can assist Sasol in paying down its debt.
Sasol has developed a list of ten major assets that will be prioritised for sale in the coming weeks and months as it moves to streamline the business into “Sasol 2.0”, while also raising proceeds to help the chemicals and energy group reduce a $9.5 billion debt burden.
Sasol CFO Paul Victor told Engineering News that the ten assets have a “high probability of being sold at value and that can assist us in paying down the debt”.
In light of the depressed environment, Paul reported that Sasol is continually assessing whether or not it is likely to receive fair value from the disposals, or whether to hold back on the sale. For instance, while the group’s export coal business has been identified as non-core, Paul said that a decision has been made not to proceed with the disposal until the coal market recovers.
Financial advisers have already been appointed for all ten possible transactions, which include non-core assets such as Sasol’s upstream oil assets in Gabon, as well as core but non-strategic assets such as the Republic of Mozambique Pipeline Investment Company (Rompco) pipeline.
“By contrast [to Sasol’s coal business], Rompco works on a tariff and relies on commercial throughput to earn money rather than the actual price of the gas. Hence, that sale will yield a market-related return that is unaffected by what is happening in the gas market.”
Sasol has set a goal of reducing its debt to about $4 billion by the end of its 2021 financial year and hopes to achieve this through a combination of asset disposals of between $2 billion and $4 billion, or higher, and a possible rights issue which has been capped at $2 billion.
“If we come to the point where we have sold as much as we can, for the best prices we can receive, but we still need to reduce debt, then we will need to sit with shareholders and consider a rights issue, or whether we should rather sell more assets, but at a lower value,” Paul said.