South Africa’s Sasol has made progress in righting its progress, putting it on the right direction for a greener, cleaner future. The company has cut gearing from 114.5% as of the end of June 2020 to 76% at the end of December. Repaying its US dollar debt accounted for the largest part of this reduction. A stronger rand-US dollar exchange rate also helped.

As a result of progress made, Sasol will not go ahead with its plan for a $2 billion rights issue. Sasol’s CFO Paul Victor said that it “didn’t make sense” to go ahead with the issue at a point when the company had made progress. The move would have caused a “mountain of issues to navigate”, he said, in part because of the impact on talks with lenders. “I’m pleased to have avoided it.”

Talks with lenders were one of the areas of success for Sasol. The company’s backers agreed to lift gearing covenants to 4 times net debt to EBITDA, from 3 times. As a result of saving cash and asset sales, the company paid down $2bn of debt. The combination of COVID-19 and low oil prices was a “double perfect storm”, Victor said. The company had been making plans to reassess its portfolio since 2017 and while March 2020 was “not the best time”, Sasol has “hit the button hard”, the CFO continued.

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Source: EnergyVoice