Sasol Limited today announced South Africa's single largest broad-based black economic empowerment (BEE) ownership transaction to date. If approved by shareholders, the transaction will be implemented in 2008. Entailing a proposed 10% of Sasol Limited's issued share capital, the equity ownership value is approximately R17,9 billion at the closing share price of R285 on 5 September 2007.
Sasol chairman Pieter Cox says: "This transaction is ground-breaking, not only in terms of its size, but also in terms of its overarching ambition to create a legacy of building skills and capacity in the South African economy". Cox points out that a growing South African economy is good for Sasol and its shareholders. Sasol is the third largest company with a primary listing in South Africa. Most of its business, and profits, come from South Africa.
"A unique feature of this transaction is the broad black public share offer. We want as many black South Africans as feasibly possible, most of whom have never owned shares before, to become shareholders," says Sasol CE Pat Davies. In addition, almost 27,000 Sasol staff will be allocated shares in terms of a significant employee share ownership scheme, being done in consultation with Sasol's trade unions. Another differentiating feature is the strong focus on creating economic capacity and skills development among historically disadvantaged communities throughout South Africa. This will be achieved by choosing suitable BEE partners and creating a Sasol Foundation.
The BEE transaction will be structured so that a proposed 10% interest in Sasol Limited will be transferred to:
- South African black public (3%)
- Selected BEE groups (1,5%)
- Sasol employees, with permanent South African residence, below managerial level, comprising 60% black and 40% white employees; black managers; and black non-executive directors (4%).
- Sasol Foundation (1,5%).
Sasol will make it possible for participants to obtain shares in an affordable manner.
To mitigate potential dilution of interests held by existing shareholders, Sasol may consider, if necessary, a share buy-back programme through a scheme of arrangement with its shareholders.
The BEE transaction will be funded via a combination of equity, third party funding and facilitation by Sasol. Because of its proven track record in extending empowerment initiatives to a broad-base of historically disadvantaged South Africans, Sasol is working with the National Empowerment Fund (NEF) to explore ways of reaching as many black South Africans as possible, especially those in the lower income groups.
A Sasol Foundation will be created to contribute in a meaningful way to growing South Africa's skills particularly in science and technology. While details of its activities still need to be finalised, the foundation will also engage in projects that will benefit historically disadvantaged communities throughout the country. Communities near Sasol's operations in Sasolburg and Secunda, as well as women's groups will also be targeted as beneficiaries.
"Sustaining the strong economic growth of the past decade is largely dependent on providing the majority of South Africans with the opportunity to develop relevant skills needed to build our nation. Sasol intends to be part of this effort. An enhanced skills base will also be needed to execute Sasol's growth strategy, particularly as we move ahead with developing new synthetic plants in South Africa and elsewhere in the world," says Cox.
As a major participant in the South African economy, Sasol welcomes the role that it can play in helping to meet our country's socio-economic objectives as outlined in government's broad-based BEE policies and the Accelerated and Shared Growth Initiative for South Africa. It is with this in mind that Sasol is structuring its BEE transaction to have a long-term sustainable impact on both Sasol and South Africa, thus helping realise South Africa's full economic potential.
Davies says that Sasol's commitment to broad-based BEE is already evident in other initiatives throughout the group. These range from significant equity ownership transactions at subsidiaries such as Sasol Oil and Sasol Mining, with another Sasol Mining announcement pending later this year; through to the appointment of senior black executives and managers; significant investments in developing black staff throughout the organisation; preferential procurement; as well as broader enterprise and skills development and community upliftment initiatives.
Together with its advisers, Sasol is confident it can ably execute this large and ambitious transaction. A full-time team of project managers and other specialists have been dedicated to implementing the transaction. For more details please read the "first terms announcement" to shareholders. This can be located on the Sasol Internet home page at www.sasol.com.
Full details of the BEE transaction will be announced in the first half of 2008 when the transaction will be proposed to Sasol's shareholders. This will include details of the process that qualifying persons should follow to participate in the employee share scheme and the black retail public offer.
Black groups will be requested to express their interest in participating in the transaction as selected partners. A request for an expression of interest will be published in the national media on 16 and 17 September 2007.
NOTES FOR EDITORS
Funding
Each of the four target groupings - namely South African black public; selected BEE groups; Sasol employees below managerial level (60% black and 40% white), black managers and black non-executive directors; and the Sasol Foundation - will obtain ownership in 10% of Sasol's issued share capital through a dedicated trust or company that will hold the shares for their benefit. Each grouping will have full economic and voting rights associated with their investment entity. These structures will endure for 10 years.
The selected BEE groups and black public investments in Sasol will be funded by way of equity contributions, third party funding (external preference shares) and appropriate Sasol facilitation. The employee scheme investment entity and the Sasol Foundation will be assisted entirely through Sasol facilitation.
Sasol will create a new class of unlisted shares, namely preferred ordinary shares with a fixed accumulative dividend right. In all other respects these shares will be identical to Sasol ordinary shares and, after the 10 year period, will ultimately be listed on the JSE Limited as ordinary shares.
Black public
The transaction has been designed to provide long-term benefits to a wide group of black South Africans and will focus on lower income groups, and particularly women. To achieve this, Sasol will initiate an extensive national campaign to reach the greater South African black public, inviting them to participate in this transaction, which will represent 3% of Sasol's issued share capital. Details of the qualifying criteria, as well as the terms on which black South Africans will be able to participate, will be published in due course. Sasol and the National Empowerment Fund (NEF) are also exploring ways in which the NEF can help achieve the goal of involving as many black South Africans as possible in this transaction.
Selected BEE Groups
BEE groups currently involved in Sasol's business (eg unions, customers and suppliers), as well as broad-based BEE groups with a skills development focus (particularly in science and technology) will be considered for selection. Preference will be given to groups who are active in the vicinity of Sasol's operations in Sasolburg and Secunda, with a specific focus on broad-based women's groups. Selected participants will play a critical role furthering Sasol's broad empowerment objectives and will hold rights to 1,5% of Sasol's issued share capital.
Employees, Black Managers and Non-Executive Directors
For Sasol, the participation of employees (60% black and 40% white) below managerial level, together with black managers and non-executive directors is an important component in this transaction. Their involvement is intended to broaden employee ownership in Sasol and to spread a significant proportion of the BEE transaction among individuals who are key to the sustained success of the company.
All permanent employees below managerial level that hold South African residence status will benefit from an allocation of 3,7% of Sasol's issued share capital. Black South African management and black non-executive directors, collectively, will benefit from 0,3%.
To ensure immediate flow-through of benefits to participants the Sasol employee scheme investment entity will receive 50% of the dividends declared. This will be distributed to Sasol employees, black managers and black non-executive directors.
Sasol Foundation
A Sasol Foundation will be created to contribute in a meaningful way to growing South Africa's skills particularly in science and technology. While details of its activities still need to be finalised, the foundation will also engage in projects that will benefit historically disadvantaged communities throughout the country. Communities near Sasol's operations in Sasolburg and Secunda, as well as women's groups will also be targeted as beneficiaries.
This transaction's overarching ambition is to create a legacy of building skills and economic capacity among historically disadvantaged communities throughout South Africa. An enhanced skills base will also be needed to execute Sasol's growth strategy, particularly as it moves ahead with developing new synthetic plants in South Africa and elsewhere in the world
The Sasol Foundation will benefit from the allocation of 1,5% of Sasol's issued share capital.
Advisers
Rand Merchant Bank, Edward Nathan Sonnenbergs and Deutsche Bank are advising Sasol on this transaction.
For more information
Marina Bidoli, Sasol Group Communications Manager
Direct telephone +27 (11) 441 3202;
Johann van Rheede, Sasol Media Manager
Direct telephone +27 (011) 441-3295; Mobile +27 (0) 82329 0186;
