Sasol to sell 50 percent stake in Lake Charles Chemicals business

LyondellBasell will buy a 50 percent stake in LCCP Base Chemicals Business for $2 billion.

Sasol has announced its plans to sell a 50 percent stake in the Lake Charles Chemicals Projects (LCCP) Base Chemicals Business for $2 billion (R33.4 billion) to plastics, chemicals and refining company LyondellBasell.

The group said the transaction was subject to shareholder approval and would result in the creation of a 50/50 joint venture with LyondellBasell concerning the LCCP Base Chemicals Business and the associated land.

According to the statement, the intention of the sale is to generate significant proceeds to apply towards outstanding debt, while enhancing the benefits to be gained from the substantial investment. “Through this process it became clear that the proposal that offered the best combination of upfront and the long-term value was that offered by the LyondellBasell group.”

As a result of the transaction, the group said its net debt before lease liabilities is expected to reduce materially from approximately $10 billion to $8 billion, significantly improving Sasol’s financial position.

Sasol also stated that the transaction was in line with delivering on strategic objectives, given that it would continue to have full ownership and would continue to operate the US Performance Chemicals Business as well as the legacy base chemicals business.

The company announced its plans to reduce debt and reset its strategy to improve its long-term shareholder returns in a lower oil price environment in March, after oil prices fell to record lows. This was in response to a decline in demand following restrictions to curb the spread of Covid-19.

Sasol also recently sold its air separation business to Air Liquide for about R8.5 billion.

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