JOHANNESBURG, Sept. 10, 2020 /PRNewswire/ -- Sasol refers
its shareholders to the Stock Exchange News Service announcement of
29 July 2020, which informed the
market that Sasol South Africa Limited ("SSA"), a major subsidiary
of Sasol, had signed an exclusive negotiation agreement with Air
Liquide Large Industries South Africa Proprietary Limited ("Air
Liquide") for the sale of SSA's sixteen air separations units
and associated business located in Secunda.
Sasol is pleased to announce that negotiations with Air Liquide
have been concluded and a sale of business agreement (the "Sale
Agreement") has been entered into, under which SSA shall
dispose of its air separation business located in Secunda,
("the Business") to Air Liquide ("the
Transaction") subject to the suspensive conditions
outlined below.
Air Liquide is a world leader in gases, technologies and related
services, and operates in 80 countries with approximately
67 000 employees. Air Liquide has provided technical and
engineering support to Sasol in Secunda since 1979.
Description of the Business
The Business comprises the sixteen air separation units
("ASUs"), and related assets with a combined capacity of up
to 42 000 tons of oxygen per day, that provide oxygen for
Sasol's fuels and chemical production processes in Secunda. The
ASUs produce various other gases utilised at Secunda, and rare
gases sold externally. Employees related to the Business will
transfer to Air Liquide as part of the arrangement.
Subsequent to the Transaction, Air Liquide will supply various
gases to SSA's operations under a long-term gas supply agreement
("Gas Supply Agreement") with an initial term of 15 years.
It is anticipated that Air Liquide's expertise would allow, in
coordination with Sasol, a targeted reduction in greenhouse gas
(GHG) emissions associated with oxygen production over
time.
In addition to the Sale Agreement and the Gas Supply Agreement,
SSA and Air Liquide ("the Parties") have also concluded
various ancillary service, lease and like agreements (collectively
"the Transaction Documents"). This includes an agreement for
Sasol to sell key utilities to Air Liquide, to enable continuous
gas production.
Rationale for the Transaction
This Transaction forms part of Sasol's expanded and accelerated
divestment programme announced on 17 March
2020. Sasol has identified the operation of the ASUs and
associated business by a third-party expert as an opportunity to
deliver upfront cash proceeds whilst also contributing to Sasol's
objectives of improved efficiency and decarbonisation at the
Secunda site.
Air Liquide has significant expertise in operating
industrial-scale ASUs worldwide and is expected to utilise this
experience to deliver efficiency and reliability benefits for
Sasol. Air Liquide will work closely with Sasol to continue to
leverage Sasol's broad expertise in site operations and optimally
managing the integrated value chain. As Air Liquide already owns
the seventeenth ASU on the Secunda site, it is expected that
ownership and operations of the full air separation fleet will
provide further gains in operational efficiency. Improvements will
be driven by a variety of factors including advanced application of
technology and technical ability, and potential future capital
investments by Air Liquide. It is expected that these improvements
will position the ASUs for more efficient operations under a
rapidly evolving future environmental landscape. Air Liquide will
collaborate with Sasol in the development of our overall
sustainability roadmap at the Secunda site. We will provide more
details on this roadmap in the coming months.
Air Liquide will take full ownership and overall responsibility
for managing the ASUs, including all future capital and
operating requirements, to maintain the agreed quantity and
quality of gases supplied to Sasol.
Total estimated capital expenditure of R8 to 12 billion would
have been spent by Sasol over the next 15 years. The ASUs require
significant capital to sustain reliable operations, as well as
improved efficiencies to enable decarbonisation. This includes an
extensive restoration and sustenance program to ensure the ability
to supply the site in the longer term.
Terms of the Transaction
a) Purchase Consideration
In terms of the Sale Agreement, the Parties have agreed that the
purchase consideration payable by Air Liquide to SSA for the
Business shall be an amount of approximately R8,5 billion
(EUR148,75 million (to be settled in
US Dollars at the closing of the Transaction), plus ZAR 5,525 billion). The total amount shall be
settled in cash by Air Liquide following satisfaction of the
suspensive conditions contained in the Sale Agreement.
b) Impact of Gas Supply Agreement (GSA)
The GSA will achieve common objectives of the parties through a
long-term supply agreement. The GSA enables the benefits of
securing reliable oxygen supply for the Secunda site into the
longer term.
It is anticipated that the Transaction will result in additional
cash outflow for Sasol of approximately R650 million to R 1,2
billion per annum in real terms, over the term of the agreement.
This estimate is largely dependent on the energy efficiency
benefits which are achieved over time. Furthermore, potential
further upside exists through the joint execution of a GHG
reduction roadmap.
c) Other Significant Terms
The Sale Agreement contains warranties and indemnities which are
standard for a transaction of this nature as well as a typical
material adverse change clause, which allows Air Liquide to
terminate the Sale Agreement before closing in the event that
certain defined material adverse changes occur before closing.
d) Suspensive conditions to the
Transaction
The Disposal is subject, inter alia, to the following key
suspensive conditions:
1.1. Approval by the
Competition Authorities;
1.2. Provision by Sasol Limited of a guarantee in favour of
Air Liquide, as security for SSA's obligations to Air Liquide under
the Sale Agreement and selected obligations under the Gas Supply
Agreement; and
1.3. to the extent applicable, approval by the South African
Reserve Bank of the implementation of the Sale Agreement and
the Transaction Documents
(collectively the "Suspensive
Conditions").
e) Implementation and Effective Dates of the
Transaction
The implementation and effective date of the Transaction shall
fall ten business days after the date on which the Suspensive
Conditions are fulfilled or waived, as the case may be, but will
not be earlier than 1 December
2020.
Application of proceeds
The proceeds, net of associated tax obligations related to the
Transaction, will be utilised within the Sasol Group to facilitate
repayment of near-term debt obligations. Total tax obligations
related to the Transaction are expected to be approximately R2,1 to
R2,3 billion. The availability of the net proceeds for repayment of
debt obligations will depend on the final tax position of SSA.
Net asset value and profits attributable to the net assets of
the Business
The value of the net assets of the Business was R5,6 billion at
30 June 2020. As Sasol currently
operates the ASUs internally, the only revenues which were made in
relation to the Business, related to external sales of rare gases
(less than R100 million revenue per year).
Categorisation of the Transaction
The Transaction is classified as a Category 2 transaction in
terms of the Listing Requirements issued by the JSE Limited
("JSE Listings Requirements") and accordingly does not
require approval by the shareholders of Sasol.
Cautionary
This announcement does not serve to withdraw the cautionary
announcement by the Company on 17 August
2020 and shareholders of Sasol should accordingly continue
to exercise caution when dealing in the Company's securities.
For further information, please contact:
Sasol
Investor Relations,
Feroza Syed, Chief Investor
Relations Officer
Direct telephone: +27 (0) 82 557 7740 |
investor.relations@sasol.com
Disclaimer - Forward-looking statements
Sasol may, in this document, make certain statements that are
not historical facts and relate to analyses and other information
which are based on forecasts of future results and estimates of
amounts not yet determinable. These statements may also relate to
our future prospects, expectations, developments and business
strategies. Examples of such forward-looking statements include,
but are not limited to, the impact of the novel coronavirus
(COVID-19) pandemic on Sasol's business, results of operations,
financial condition and liquidity and statements regarding the
effectiveness of any actions taken by Sasol to address or limit any
impact of COVID-19 on its business; statements regarding exchange
rate fluctuations, changing crude oil prices , volume growth,
increases in market share, total shareholder return, executing our
growth projects (including LCCP), oil and gas reserves, cost
reductions, our climate change strategy and business performance
outlook. Words such as "believe", "anticipate", "expect", "intend",
"seek", "will", "plan", "could", "may", "endeavour", "target",
"forecast" and "project" and similar expressions are intended to
identify such forward-looking statements, but are not the exclusive
means of identifying such statements. By their very nature,
forward-looking statements involve inherent risks and
uncertainties, both general and specific, and there are risks that
the predictions, forecasts, projections and other forward-looking
statements will not be achieved. If one or more of these risks
materialise, or should underlying assumptions prove incorrect, our
actual results may differ materially from those anticipated. You
should understand that a number of important factors could cause
actual results to differ materially from the plans, objectives,
expectations, estimates and intentions expressed in such
forward-looking statements. These factors and others are discussed
more fully in our most recent annual report on Form 20-F filed on
24 August 2020 and in other filings
with the United States Securities and Exchange Commission. The list
of factors discussed therein is not exhaustive; when relying on
forward-looking statements to make investment decisions, you should
carefully consider both these factors and other uncertainties and
events. Forward-looking statements apply only as of the date on
which they are made, and we do not undertake any obligation to
update or revise any of them, whether as a result of new
information, future events or otherwise.
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SOURCE Sasol Limited