Sasol’s R18bn empowerment deal

10 September 2007

South African petrochemical company Sasol this week announced a broad-based black economic empowerment (BEE) deal, which if approved, will see 10% of the company’s shares, currently worth approximately R18-billion, placed under ownership of previously disadvantaged individuals and groups.

“This transaction is ground-breaking, not only in terms of its size, but also in terms of its overarching ambition to create a legacy of building skills and capacity in the South African economy,” Sasol chairman Peter Cox said in a statement issued on Monday.

In terms of the transaction, 3% of shares will be transferred to black South Africans, 1,5% to selected BEE groups, 1,5% to the Sasol Foundation and 4% to Sasol employees with permanent South African residence below managerial level, comprising 60% black and 40% white employees, black managers and black non-executive directors.

This 10% stake in the company is valued at approximately R17.9-billion, based on a closing share price of R285 on 5 September this year.

Sasol is working with the National Empowerment Fund to identify ways of reaching as many black South Africans as possible, especially those in lower income groups.

To date, the company said it would target communities near its operations in Sasolburg and Secunda, as well as women’s groups as beneficiaries of the empowerment deal.

The deal will benefit almost 27 000 Sasol employees, while the Sasol Foundation will be created to contribute to growing South Africa’s skills particularly in science and technology.

“Sustaining the strong economic growth of the past decade is largely dependent on providing the majority of South Africans with the opportunity to develop relevant skills needed to build our nation. Sasol intends to be part of this effort,” Cox said.

“An enhanced skills base will also be needed to execute Sasol’s growth strategy, particularly as we move ahead with developing new synthetic plants in South Africa and elsewhere in the world.”

Sasol will fund the BEE transaction through a combination of equity, third party funding and facilitation by the company itself. To mitigate potential dilution of interests held by existing shareholders, Sasol said it may consider, if necessary, a share buy-back programme.

“A unique feature of this transaction is the broad black public share offer,” said Sasol chief executive Pat Davies. “We want as many black South Africans as feasibly possible, most of whom have never owned shares before, to become shareholders.”

He added that Sasol’s commitment to broad-based BEE was already evident in other initiatives throughout the group, ranging from significant equity ownership transactions at subsidiaries such as Sasol Oil and Sasol Mining.

The company will announce full details of the transaction in the first half of 2008, when it will be proposed to Sasol shareholders. This will include details of the process that qualifying persons should follow to participate in the employee share scheme and the black retail public offer.

Sasol said it will run a national media campaign on 16 and 17 September where it will request for an expression of interested from BEE groups wanting to participate in the empowerment deal. reporter

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