JOHANNESBURG - As the flopped Sasol Inzalo empowerment scheme draws to a close, Sasol Limited has prioritised debt amortisation over dividends in the new fully vendor-financed Sasol Khanyisa, Sasol has told a group of Inzalo shareholders.
Sasol Inzalo, launched amid much fanfare in 2008, will unwind in June without creating net value for thousands of its shareholders.
The group has lauded the prospects of Sasol Khanyisa - Sasol Inzalo’s replacement - and has highlighted its focus on net value creation over the next 10 years.
Sasol Khanyisa will achieve at least 25percent broad-based black economic empowerment (B-BBEE) ownership credentials in Sasol South Africa (SSA). SSA includes Secunda Synfuels Operations, Secunda Chemicals Operations and Sasolburg Operations.
Speaking to the shareholders yesterday, Sasol’s senior vice-president corporate finance and portfolio management, Freddie Meyer, said the success of Sasol Khanyisa would not be dependent on the appreciation of Sasol’s share price, because dividends from SSA would repay the debt.
Unlike Sasol Inzalo, Sasol Khanyisa would not rely on third-party funding as Sasol would fully fund the scheme.
Meyer said about 80percent of SSA’s dividend would go to Sasol Limited and 20percent would be disbursed to the Khanyisa employee share ownership plan and Khanyisa Public.
“Out of that, 97.5percent of that will be used to pay back the debt and 2.5percent, after payment of Khanyisa administrative cost, will go to Khanyisa shareholders.”
Sasol has opted for a funding model similar to that used in its other subsidiaries, Sasol Mining and Sasol Oil, when they sealed black economic empowerment deals.
For instance, Sasol Oil’s empowerment partner Tshwarisano paid off its debt in 2016. “We have basically taken some of those lessons from Tshwarisano to see if we can do the same thing,” he said.
Dividends
Meyer said that for the duration of the Inzalo scheme, one dividend had been declared to the shareholders who opted for the funded option of the scheme.
The rest of the dividends had gone towards servicing the debt from banks.
On the other hand, Sasol employees who were part of the Sasol Inzalo Employee Scheme had received a dividend when the group declared one.
Sasol corporate transactions lead Busisiwe Mathibe said yesterday that the employees had received 50percent of the dividends, with the other half going towards servicing the debt.
Meyer said that when Sasol concluded Inzalo in 2008, the interest rates had been relatively high. The interest burden had been higher than the dividend inflow from Sasol to Inzalo.
He said that six months after the launch of Inzalo, the global financial crisis had hit.
“When we launched the transaction, oil prices were $140 a barrel (and) within six months, oil was trading at $35 a barrel,” said Meyer.
Sasol’s shares on the JSE closed yesterday 0.40percent lower at R400.40 a share.