Proceeds from Sasol’s INEOS Gemini HDPE divestment to repay near-term debt


Proceeds from Sasol's INEOS Gemini HDPE divestment to repay near-term debt

By Given Majola Time of article published 27m ago

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DURBAN – Global integrated chemicals and energy company Sasol said that the cash proceeds from the transaction received on 31 December 2020 will be used to repay its near-term debt obligations.

On Monday, Sasol announced in an investors notice that its divestment of its 50 percent interest in the Gemini high-density polyethylene joint ventures to INEOS Gemini HDPE LLC was successfully closed on 31 December 2020.

“The consideration of US$404 million was satisfied through a combination of cash and release from debt obligations. The relevant debt facilities and security package have now been successfully restructured, releasing Sasol and its subsidiaries from any obligation to provide further security. The cash proceeds from the transaction were received on 31 December 2020, and will be used by Sasol to repay near-term debt obligations,” read the statement.

In March last year the troubled petrochemicals giant unveiled a planned $6 billion (R104bn) cash-raising initiative by the end of the 2021 financial year as it sought to reduce debt levels from the Lake Charles Chemicals Project, among other woes.

The collapse in oil prices and weak economic activity due to the Covid-19 pandemic has exacerbated Sasol’s stretched balance sheet. To protect the balance sheet, Sasol implemented a comprehensive response plan to enhance cash flow and reposition the balance sheet to be resilient in a sustained low oil price environment.

In an effort to cushion the impact of the weak oil price environment, Sasol had announced measures including a cash-conservation programme, an asset disposal programme, potential partnering for Sasol’s US Base Chemicals assets, a rights issue of up to $2bn in the second half of the 2021 financial year.

In August last year, Sasol reported an R91.3 billion annual loss for the year ended June on plummeting oil prices. The group said that the combined effects of unprecedented low oil prices, destruction of demand for products and impairments of R111.6 billion resulted in a loss of R91.3 bn for the year compared to earnings of R6.1 billion in the prior year.


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