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Company News

UPDATE 1-Sasol to consider rights issue, asset disposals as oil crash speeds investor flight

    * Sasol to consider rights issue and further asset sales
    * Shares down 80% this week 
    * Stock set for worst week since listing in 1989
    * Market cap falls by $4.6 bln 
    * Oil crash compounds worries over debt, project delay

 (Recasts with Sasol considering rights issue, asset sales)
    By Helen Reid and Tanisha Heiberg
    JOHANNESBURG, March 12 (Reuters) - South African
petrochemicals group Sasol said it would consider
raising funds by selling additional shares and disposing of more
assets amid growing investor concerns about its debt levels
after a crash in the price of oil. 
    Around 76.5 billion Rand ($4.6 billion) has been wiped off
the company's market value this week, with Sasol's shares
hitting a 21-year low on Thursday, falling as much as 42% as oil
prices plunged before recovering slightly to end the day down
29.36% at 37.24 rand.
    Barring a significant recovery, this will be Sasol's worst
week since listing in September 1989. 
    The unexpected fall in oil prices has rattled investors who
were already concerned about the company's high debt after it
renegotiated some debt covenants last November.
    Reacting to the frantic selling, Sasol said it would
consider a potential equity issue, reduce costs, reschedule some
capital expenditure, expand asset disposals in excess of the
current $2 billion target and engage lending groups.  
    The company said cash and available facilities stood at
around $2.5 billion rand with no significant debt maturities
before May 2021. It has just completed a review of its assets in
a bid to reduce debt.
    Seeking to assuage investors' fears the company could break
its debt covenants, it said that at the current oil price of
approximately R580/bbl, it would be within current covenant
levels at 30 June 2020.
    Sasol's newly appointed chief executive officer Fleetwood
Grobler said it was critical the company acted quickly and
decisively. 
    "We are therefore working towards a package of measures to
ensure that the business is profitable even at low oil prices
and that we continue to have a strong balance sheet to support
it," said Grobler. 
    
    ANOTHER HEADACHE FOR SOUTH AFRICA 
    Monday's crude price crash further hobbled a company already
battling to restore shareholder confidence after delays and cost
over-runs at its Lake Charles Chemicals project (LCCP) in
Louisiana forced its joint chief executives to resign late last
year.
    "With the oil price collapsing, it's eroded the margin they
were expecting on the        project," said an investor who sold
his Sasol shares on Monday. 
    The destruction of value at one of South Africa's biggest
companies adds to headaches for a government already grappling
with a heavily-indebted state power company and airline. 
    Although not a state-run company, Sasol's two top
shareholders are state agencies - State asset manager the Public
Investment Corporation has a 15.05% stake, while local
development finance institution Industrial Development
Corporation holds 8.53%, according to Refinitiv Eikon. 
    Sasol said it would update the market in a conference call
on Tuesday.
    
 
 
 
    
 (Additional reporting by Emma Rumney; editing by Barbara Lewis,
Kirsten Donovan)
  
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