
Bloomberg
Sasol Ltd reported an annual loss after $6.5 billion in asset writedowns and the scheduling of a rights issue as its struggles continued amid the coronavirus pandemic. The shares slumped as much as 9.6%.
Lower demand and prices for its products due to the virus, compounded by problems at its US Lake Charles chemical project, is making a bad year worse for the South African company. Sasol said it plans to sell as much as $2 billion of shares in a rights issue in the first half of 2021, a move executives had said was a last resort contingent on the success of an accelerated asset disposal plan.
“The combined effects
of unprecedented low oil prices, destruction of demand for products†and writedowns resulted in the loss, the company said. “Within a volatile and uncertain macroeconomic environment, our foundation businesses still delivered resilient results.â€
Sasol’s net loss was 91 billion rand ($5.2 billion) for the year ended on June 30, after 112 billion rand in asset writedowns, according to a statement. The shares were 5.8% lower at 10:59 am in Johannesburg, earlier dropping to the lowest intraday level in two weeks.
The company plans to focus specifically on chemicals and energy, its core businesses, after a string of disappointments at the Lake Charles Chemicals Project in Louisiana. Those failings resulted in the resignation of its co-CEOs and cost overruns that drew attention to its net debt.
Lake Charles, approved in 2014 at an estimated cost of $8.1 billion, exceeded its “worst-case scenario†for price over the last few years as problems continued to deepen.
The last remaining unit to come online will be the low density polyethylene facility, which was damaged during a fire in January. That is expected to reach full operation in October, extending earlier delays.
The South Africa fuels and chemicals maker has moved forward with its asset sales, including a stake in the US chemicals business. It has had “huge interest†for the stakes in Lake Charles and its holding in the Mozambique-to-South Africa Rompco natural gas pipeline, Chief Executive Officer Fleetwood Grobler said.
Sasol has already agreed with Air Liquide SA to sell air-separation units for 8.5 billion rand and a 10% interest in the Escravos gas-to-liquids plant in Nigeria to Chevron Corp.
The company said it has also made progress with lenders to relax covenants, when a $1 billion syndicated loan comes due.
Net debt is currently almost $10 billion and it intends to reduce that by as much as $6 billion.