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South Africa: No Big Names in Sasol Empowerment Deal
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Business Day (Johannesburg)
26 March 2008
Posted to the web 26 March 2008
Siseko Njobeni
Johannesburg
BLACK South Africans are set to get a piece of petrochemicals group Sasol and benefit from profits from high oil prices through a discounted share offer that opens on May 22.
This and other details were announced yesterday as Sasol unveiled its long-awaited R25,9bn black economic empowerment (BEE) transaction. Sasol's deal, the single largest broad-based BEE deal to date, is a departure from previous large deals which centred on big-name personalities.
Under the deal, called Sasol Inzalo, Sasol will sell 63,1- million shares, or 10% of its issued share capital, to a varied group of beneficiaries. These are employees (4%), black South Africans (3%), a Sasol Foundation initiative (1,5%) and selected empowerment participants (1,5%). Sasol executive director Nolitha Fakude said the com- pany would facilitate 80% of the transaction.
The shares will cost R366, an 11% discount on R410, the closing price on March 18. Financial director Christine Ramon said R366 was a fair price. A rise in Sasol's share price in recent months has boosted the value of the deal from last year's R18bn to R25,9bn.
Sasol said black South Africans could own up to 3% of the group through a cash invitation and a funded invitation. In the cash invitation, blacks would be eligible to buy up to 18,9-million shares at R366 each. In the funded invitation, Sasol would facilitate the purchase of the shares by reducing the cash contribution required.
The minimum subscription would be for 25 shares. In the event of oversubscription, Sasol would give preference to subscribers for the smallest amounts. "Sasol's objective is to make the funded invitation accessible to as many black people and black groups as possible," the company said. Participants in the funded invitation may not sell their shares for three years.
In the past, Sasol drew criticism, notably from shareholder the Public Investment Corporation and the government, over its perceived slow pace of transformation. "Sasol is truly committed to SA's transformation and wants to make broad-based economic empowerment a reality. We will make a difference by creating economic opportunities for more than a million potential beneficiaries ranging from individuals to rural women's groups who can invest in Sasol," CE Pat Davies said.
He said the deal was unparalleled in size and reach, "designed to introduce new entrants".
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Fakude said the company sought to move away from concentrating on equity. "We have sought to deliver on the other pillars of black economic empowerment."
Ramon said the total cost of the deal to Sasol was R7,2bn, made up of cash and noncash components. She said the cash component included transaction costs of R130m. The group said the transaction would have a positive effect on its net asset value. That contrasts with its statement last year that net asset value would come down 14,6%.
Paul Theron of Vestact said the change in the effect on net asset value could be attributed to the share price increase. "It is interesting what a share price can do. Not long ago Sasol was at about R300 a share. Now R366 is a discount."
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