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Sasol can afford BEE deal - Moody's

By unknown | Apr 08, 2008 | COMMENTS [ 0 ]

Robert Laing

Sasol's R26billion black economic empowerment deal may cause "some short term financial pressure" but not enough to harm its credit score, is rating agency Moody's verdict.

Sasol has spent about R11billion buying back its shares so that existing investors won't see their holdings diluted when it issues 61million new shares to BEE participants.

The synfuel giant expects to raise just over R8billion by offering shares to the black public for R366 each, a discount to its current price of around R396.

A comment note from the ratings agency said: "Moody's considers that the transaction may result in some short-term financial pressure, specifically in terms of leverage and liquidity, as Sasol has used internal funds to acquire its own shares.

"However, the robust current oil price (which underpins Sasol's financial performance) and Sasol's own financial performance and strong market position in South Africa, provide enough headroom in the rating to absorb these near-term leverage and liquidity pressures."

Moody's said it has therefore decided to maintain Sasol's credit rating.

Sasol's plan to allocate 10percent of itself to BEE participants involves providing "notional vendor finance" for about half the shares which are earmarked for its staff and an education trust.

It is also underwriting a R5billion placement to third party BEE participants.


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