Sasol shareholders back joint venture with LyondellBasell

Sasol shareholders endorse a joint venture with LyondellBasell as part of a debt repayment plan.

On 20 November Sasol announced that shareholders had approved a proposed agreement to form a joint venture with chemical company LyondellBasell Industries in a bid to pay down debt.

In October, LyondellBasell agreed to acquire a 50 percent stake of Sasol’s base chemicals business at Lake Charles for $2 billion and operate the newly formed joint venture.

The agreement’s terms include the two companies forming a 50/50 joint venture, which will take over the base chemicals business at Lake Charles. LyondellBasell will be the operator of the new JV firm.

Sasol, the world’s leading manufacturer of motor fuel from coal, has been battling high debt amid lower oil and chemicals prices and falling fuel demand due to a country-wide lockdown to prevent the spread of Covid-19.

Sasol embarked on a three-pronged strategy this year which included disposal of assets, cash conservation efforts and a rights issue to avert a debt crisis and repair its balance sheet. Investors have been concerned by the company’s rising debt level, which stood at R189.7-billion for the year to June 30.

Sasol CFO Paul Victor told shareholders that the company will measure the success of self-help measures to inform the ticket size of the rights issue, adding that the decision will be reserved until February 2021.