2.
The Transaction
Transaction structure
The Transaction will result in the creation of a 50/50 joint venture with LyondellBasell in relation to the
LCCP Base Chemicals Business and the associated land. Sasol will retain ownership and
operatorship of the US Performance Chemicals Business, the other legacy base chemicals assets at
Lake Charles, and the remainder of the Lake Charles property.
This will be delivered pursuant to the Transaction agreements, through which Sasol Chemicals will
dispose of a 50% stake in Louisiana Integrated Polyethylene JV, LLC (“LIP”), a newly incorporated
subsidiary of Sasol Chemicals to LyondellBasell LC Offtake LLC, a subsidiary of LyondellBasell. The
purchase consideration will be US$2 billion, subject to customary and ad hoc transaction-specific
closing adjustments which are not, in aggregate, expected to be material. LIP will hold Sasol’s LCCP
Base Chemicals Business, as well as the Sale Land. Equistar Chemicals LP, an affiliate of
LyondellBasell, will be the operator of the business of LIP.
The Transaction Agreements contain customary representations and warranties from Sasol
Chemicals and LyondellBasell. If the Transaction is terminated due to, inter alia, breach by Sasol
Chemicals, or failure to obtain Sasol Shareholder approval of the Transaction, and at any time during
the six months following the date of such termination, Sasol Chemicals or any of its affiliates enters
into an alternative transaction with a third party, there will be a break fee payable by Sasol Chemicals
of US$40 million.
Transaction scope
Sasol’s LCCP Base Chemicals Business comprises the manufacture of ethylene and polyethylene
products using the following assets at the Lake Charles property, and the marketing and sale of these
products (together the “LCCP Base Chemicals Business”):
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The recently constructed ethane cracker, which produces ethylene from ethane feedstock and has
a capacity of 1540 kilotons per annum (“LCCP Cracker”);
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The low density polyethylene (“LDPE”) plant, which has a production capacity of 420 kilotons per
annum; and
The linear low density polyethylene (“LLDPE”) plant, which has a capacity of 471 kilotons per
annum).
The LCCP Base Chemicals Business excludes the original ethane cracker, which has a production
capacity of 460 kilotons of ethylene per annum (“Original Cracker”). This will be retained by Sasol
together with the US Performance Chemicals Business, consisting of –
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the ethylene oxide value chain which consists of a new 300 kilotons per annum ethylene oxide
unit and a new 100 kilotons per annum ethoxylation unit;
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the new Ziegler alcohol unit (140 kilotons per annum) which supplements the existing Ziegler unit
(at the Lake Charles property;
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the new alumina unit (32 kilotons per annum) which supplements an existing alumina unit at the
Lake Charles property;
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the new Guerbet alcohols (30 kilotons per annum) unit; and
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other Performance Chemicals units include a tetramerization unit producing 1-hexene and
1-octene, a linear alkyl benzene unit, paraffin extraction unit, and the hydrogenation unit producing
LPA solvent.