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Sasol aims to generate $6 billion to boost balance sheet

PUBLISHED: Tue, 17 Mar 2020 14:58:16 GMT

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JOHANNESBURG (Reuters) – South Africa’s Sasol aims to generate $6 billion by the end of the 2021 financial year through several measures, including a potential rights issue and asset sale, as the company looks to address debt levels after a crash in the price of oil.

Shares in the petrochemicals group rose 15% at the market open before reversing some gains to trade up 6.28% at 47.55 rand by 0716 GMT.

Sasol saw its shares plunge last week, falling to a 21-year low after oil prices dived, raising concerns about its debt levels following delays and cost overruns at its Lake Charles Chemicals project (LCCP) in Louisiana.

“The immediate focus is on the actions to stabilise the company and protect the balance sheet so that the underlying value of the portfolio is not compromised, and instead the potential realised in the interests of all Sasol’s stakeholders,” Sasol said.

The world’s top manufacturer of motor fuel from coal said it would target immediate measures to deliver a cash improvement of approximately $1 billion by June,30 2020.

Sasol said it could raise up to $2 billion in a potential rights issue after the 2020 financial year results.

The company had already entered into a standby underwriting agreement with BofA Securities, Citigroup and J.P. Morgan Securities for a rights issue.

Sasol, which has completed a review of its assets started in 2017, said it would accelerate disposals and expand the scope to realise proceeds above its previous target of $2 billion.

The company said it would also seek a potential partner at Sasol’s U.S. Base Chemicals assets.

Sasol said it was engaging its lenders under its debt facilities to discuss adequate flexibility on its financial maintenance covenant thresholds in its debt agreements.

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(Reporting by Tanisha Heiberg; Editing by Kim Coghill and Louise Heavens)

This article was first published on Reuters Africa https://af.reuters.com/article/investingNews/idAFKBN21419C-OZABS and is republished with its permission.