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Sasol has announced that one of its three black empowerment partners, Tshwarisano, had paid off its debt from its acquisition 10 years ago of a 25% stake in Sasol Oil. It cost R1.45 billion in 2006.
“In February 2016, we declared an interim dividend of R356 million to our BEE partner, Tshwarisano,” Sasol said this week.
“We are proud to announce that, based on the attractive returns generated by Sasol Oil, the debt relating to our BEE partner’s equity shareholding has been settled.”
Black Management Forum (BMF) deputy president Dumisani Mpafa said that it was always good news when an empowerment transaction vested.
The BMF congratulated Tshwarisano for reaching this milestone, especially under difficult trading conditions.
However, Mpafa said that anecdotal evidence showed that there were a lot of empowerment deals that were under water.
“This, unfortunately, causes a lot of impoverishment on the part of the black participants. This is often caused by bad structuring, which is often not favourable to the black beneficiaries, but rather to the financiers and the existing shareholders.
“This is why the broad-based black economic empowerment (BBBEE) commissioner needs to review most of these major deals to verify if they measure up in terms of BBBEE requirements.
“Some of these deals are just a charade designed to earn points on the BBBEE scorecard, hence we are happy that the Tshwarisano deal has reached this milestone,” Mpafa said.
In October 2010, Sasol did a R1.845 billion deal with Ixia Coal, which has a 20% stake in the group’s mining section. It also has another empowerment scheme called Sasol Inzalo that Sasol launched in September 2008.
It is set to end in September 2018. Sasol did not disclose how much Ixia still owed. In contrast to Tshwarisano, Sasol Inzalo owed R7.4 billion at the end of June last year, when Sasol Inzalo released a set of financial results.
At the same time, Sasol Inzalo’s assets were R150 million less than its debt at R7.3 billion. For the first six months of last year, Sasol Inzalo’s net loss was R84 million down from a loss of R194 million in the first half of 2014.
As a result of the drop in the oil price, Sasol has been on a cost-saving programme. It has reduced jobs by cutting 4 900 or 14% of full-time jobs and 13 000 or nearly 23% of contractor positions. Sasol this week impaired its share in the Montney shale gas asset in Canada by C$665 million (R7.6 billion).
In late 2010 and early 2011, Sasol spent almost R22 billion on buying the Farrell Creek and Cypress shale gas assets. An analyst, who wished to remain anonymous, said that, at the time, when Sasol acquired the shale gas assets, the acquisition had looked like a “very good idea”.
However, now those shale gas assets where looking like a “terrible bet”. Bongani Nqwababa, Sasol chief financial officer, said that the Canadian shale gas assets were on Sasol’s books for C$580 million.
Nqwababa said the reason for the impairment was the low price of shale gas at 1.67 million British thermal units (mmBtu) compared with a high of 14 mmBtu in 2008.
