Sasol previously announced it was reviewing a variety of actions to address the challenges created by the impact of COVID-19 and the recent decline in the oil and chemical prices.
In the short term, Sasol needs to enhance cash flow and reposition the balance sheet on the assumption that there is a sustained low oil price until the end of financial year 2021.
It is important to reiterate that Sasol currently has available liquidity of approximately US$2.5 billion with no significant debt maturities before May 2021 and it therefore believes it is positioned to withstand recent market volatility in the short term.
Sasol believes it can maintain liquidity headroom in excess of US$1 billion over the next 12 – 18 months with a US$25 per barrel oil price before the benefits of hedging.
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Sasol has now announced a comprehensive response strategy designed to mitigate the impact of these macroeconomic factors. This includes a commitment to re-set the organisation to be globally competitive in a sustained low oil price environment.
The global portfolio of our foundation business remains cash positive under prevailing spot market conditions and an oil hedging programme has been put in place to insulate the balance sheet from further financial pressure.
A package of measures is being undertaken that is intended to fundamentally reposition the Company over the following 24 months:
- A cash conservation programme focused on enhancing cash flow and cost competitiveness in a low oil price environment, with US$2 billion cash delivery ahead of current plan targeted by 30 June 2021;
- An accelerated and expanded asset disposal programme executed in line with balance sheet, shareholder value and strategic objectives with a view to deliver proceeds significantly ahead of the US$2 billion currently targeted;
- Potential for partnering options at Sasol’s US Base Chemicals assets; and
- A potential rights issue, which has been underwritten on a standby basis, as a supplemental initiative to reset the capital structure, subject to the progress made on cash conservation initiatives and asset disposals.
Fleetwood Grobler, Sasol CEO, states:
“In this dynamic and challenging environment, it’s critical that we tighten control on what we can, acting both swiftly and decisively.
“My management team and I are fully committed to delivering on the measures that we have announced.
“Sasol has a strong underlying business and all efforts are being made to enhance EBITDA in a sustained low oil price environment.
“Delivering sustainable, long-term shareholder value is our imperative and we have a clear plan to achieve that.”