JOHANNESBURG – Petrochemicals giant Sasol has today announced plans to sell a 50 percent stake in the Lake Charles Chemicals Project (LCCP) Base Chemicals Business for $2 billion (R33.4 billion) to LyondellBasell, one of the largest plastics, chemicals and refining companies in the world.
Sasol reported 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.
Sasol said the transaction was agreed following a competitive process in which the group explored several potential constructs to determine which would realise the most value whilst protecting its long-term strategic priorities.
“The intention was to generate significant proceeds to apply towards outstanding debt while enhancing the benefits to be gained from the substantial investment in Lake Charles by partnering with a company with world-class capabilities in commodity chemicals in the industry. 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,” said Sasol.
The group believed that the transaction was a critical part of its response plan to reduce net debt, improve debt covenant compliance and enhance liquidity.
“As a result of this transaction, net debt before lease liabilities is expected to reduce materially from approximately $10 billion to approximately $8 billion, significantly improving Sasol’s financial position,” Sasol said.
The company also said 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, which would help provide an integrated value chain.
“This is consistent with the Future Sasol Strategy of increased focus on a global speciality chemicals portfolio,” said the group.
In March 2020 announced its plan to reduce debt and reset its strategy to improve long-term shareholder returns in a lower oil price environment after oil prices fell to record lows in response to decline in demand following restrictions to curb the spread of the Covid-19 pandemic.
BUSINESS REPORT ONLINE