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Sasol Limited - Signature Of Legal Agreements Relating To A Joint Venture And

Release Date: 02/11/2004 08:00:03      Code(s): SOL
SASOL LIMITED - SIGNATURE OF LEGAL AGREEMENTS RELATING TO A JOINT VENTURE AND   
WITHDRAWAL OF CAUTIONARY                                                        
Sasol Limited                                                                   
(Incorporated in the Republic of South Africa)                                  
(Registration number 1979/003231/06)                                            
(ISIN: ZAE000006896)                                                            
Share codes:   JSE -  SOL                                                       
NYSE - SSL                                                                      
("Sasol")                                                                       
Signature of legal agreements relating to a joint venture and withdrawal of     
cautionary                                                                      
Sasol and Petronas International Corporation Limited ("PICL"), a wholly-owned   
subsidiary of Malaysian State oil company Petroliam Nasional Berhad ("Petronas")
(the "Parties"), together with their respective Black Economic Empowerment      
("BEE") partners Worldwide African Investment Holdings ("Worldwide") (through   
its wholly owned subsidiary Afric Energy Resources (Pty) Limited ("AER")) and a 
Sasol BEE entity, Tshwarisano LFB Investment (Pty) Limited ("Tshwarisano")      
(collectively "the Shareholders"), have signed definitive agreements in respect 
of a joint venture comprising Sasol"s Liquid Fuels Business ("Sasol LFB") and   
Engen Limited and its subsidiaries ("Engen").                                   
1.   Introduction                                                               
On Thursday 19 February 2004, the Parties announced that they had agreed the    
principles for pooling their respective interests in Sasol LFB and Engen in a   
joint venture to create a leading South African liquid fuels business.  Together
with their BEE partners they have now signed definitive agreements in respect of
the joint venture, as described below. The joint venture will be called Uhambo  
Oil Limited ("Uhambo") and will be headquartered in Cape Town.                  
2.   Scope and vision of the joint venture                                      
The envisaged combination of Engen and Sasol LFB will create a leading South    
African liquid fuels business, which will comprise Sasol"s and Engen"s liquid   
fuels refining, blending, marketing and distribution businesses in the retail,  
commercial and wholesale markets.                                               
Sasol LFB, which will be contributed to the joint venture, includes liquid fuels
components produced at Secunda by Sasol Synfuels (Pty) Ltd ("Sasol Synfuels").  
The joint venture assets will also comprise the Enref refinery at Durban,       
Sasol"s interest in the Natref refinery at Sasolburg and approximately 1600     
service stations in South Africa. The joint venture will have operations in 14  
African countries and its geographic scope will include the whole of sub-Saharan
Africa.                                                                         
The Shareholders" vision is the creation of a business which is competitive in  
the long-term, profitable and socially responsible and which is managed to      
maximise sustainable long-term economic returns, whilst having regard to the    
long-term interests of all stakeholders.                                        
Uhambo will:                                                                    
* be managed as a leading world class business;                                 
* enhance value by targeting opportunities for the attainment of a world class  
cost structure and by optimising its capital expenditure;                       
* realise synergies arising from this joint venture; and                        
* support the BEE policies of the Government of South Africa and shall be a     
leader in the furtherance of the principles of the Liquid Fuels Charter.        
3.   Management and employees                                                   
Tan Sri Dato Sri Mohd Hassan Marican, will be appointed as Non-Executive        
Chairman of Uhambo. The position of Chief Executive Officer designate has been  
offered to Mr Jock McKenzie as of January 2005.  These appointments will be     
confirmed upon the fulfilment of the conditions precedent to the transaction and
upon approval of the Board of Uhambo. Non-Executive Directors and the senior    
management team will be appointed in due course.                                
Tan Sri Dato Sri Mohd Hassan Marican is the President and Chief Executive       
Officer of Petronas and is currently Non-Executive Chairman of Engen.  Mr Jock  
McKenzie has substantial experience in the local and international oil industry.
4.   Background to and reasons for the joint venture                            
As previously announced, the Parties believe that the strategic, commercial and 
financial logic for combining Sasol LFB and Engen is compelling. In particular, 
they believe that the joint venture will:                                       
* have a more optimal balance between refining and marketing operations than    
either Sasol LFB or Engen have alone;                                           
* create a business with substantial scale in the manufacturing of liquid fuels 
in South Africa, with a petrol, kerosene and diesel maximum production capacity 
of more than 13 million cubic metres per annum;                                 
* offer significant synergy potential in the areas of manufacturing, supply &   
trading, domestic and international marketing and corporate activities;         
* have market leading brands including the Engen, Sasol and Exel brands. As part
of the joint venture"s branding strategy, it is the intention that an overall   
number of 250 Sasol branded Convenience Centres are established as soon as      
practicable after closing;                                                      
* create an attractive vehicle for sustainable and rewarding BEE participation  
in the liquid fuels industry;                                                   
* be a leading liquid fuels retail marketing business in South Africa, with a   
presence in all provinces and a network including approximately 1600 service    
stations; and                                                                   
* market in 13 other sub-Saharan African countries.                             
5.   Black Economic Empowerment                                                 
Sasol announced in May 2004 that Dr P M Maduna (as the leader of an eminent     
group of potential BEE investors) would facilitate and structure a broad-based  
BEE consortium associated with Sasol LFB that will participate in the joint     
venture. While it is expected that the Maduna group will take an important      
position in this transaction, Tshwarisano will also involve the previous        
shareholders of Exel who currently hold shares in Sasol Oil (Pty) Ltd ("Sasol   
Oil"), as well as Batho Trust (a broad-based empowerment trust) and other broad-
based BEE interests, including women"s groups. The parties will make a further  
announcement on progress in due course.                                         
The former Exel shareholders include a trust with rural women as beneficiaries, 
a pension and provident fund with members who are pump attendants, service      
station owners and an eminent women"s group.                                    
Worldwide was founded in 1994. It is a black-owned and managed investment       
holding company. Over the years, Worldwide"s investments have primarily been in 
the oil industry, with portfolio investments in the financial services,         
telecommunications and information technology sectors. The company"s involvement
in the oil industry pre-dates the South African Liquid Fuels Charter, with its  
first investment having been in Afric Oil in 1995, which was shortly followed by
the acquisition of a 51 percent stake in Zenex in 1997. The shareholding in     
Engen is the company"s biggest investment. Worldwide"s oil industry interests   
are held through its wholly-owned subsidiary AER. In February 2004, the board of
Worldwide took the decision for the company to build on its experience in the   
oil industry and focus on the energy sector in its broader sense.               
The Parties believe that the envisaged joint venture provides the opportunity   
for the most significant BEE participation in the South African liquid fuels    
industry to date. The Parties strongly support the BEE policies of the          
Government as encapsulated in the Liquid Fuels Charter and the joint venture is 
committed to the furtherance of the principles of the Charter. The joint venture
will assist in the development of Historically Disadvantaged South Africans and 
the Parties have committed to a positive socio-economic agenda within the wider 
community. It is anticipated that Worldwide and Tshwarisano will help promote   
the joint venture"s range of BEE initiatives and the achievement of the Liquid  
Fuels Charter objectives.                                                       
In addition to achieving the equity elements of the Charter, the Parties intend 
that key areas of BEE focus will be Uhambo"s employees, dealers/franchisees and 
third party marketers, the wider community, business partners and procurement   
activities.  Both Sasol and Petronas have confirmed their willingness to lend   
their support to the training and capacity building programme by, for example,  
making available their bursary and training schemes in South Africa and Malaysia
respectively.                                                                   
6.   Terms of the JV and Transaction structure                                  
This joint venture combining Sasol LFB and Engen is a combination of equals.    
Prior to closing, Sasol will transfer an additional 23 percent shareholding in  
Sasol Oil to Tshwarisano. At closing of the transaction Sasol and Tshwarisano   
will transfer their shares (75 percent and 25 percent respectively) in Sasol Oil
to Engen in exchange for the issue of shares in Engen. This will result in Sasol
having a 37,5 percent shareholding in the enlarged share capital of Engen and   
Tshwarisano having a 12,5 percent shareholding in the enlarged share capital of 
Engen.                                                                          
Prior to the transaction, Petronas, which holds 80 percent of Engen through its 
wholly-owned subsidiary PICL, will sell 5 percent of its shares in Engen to     
Worldwide, which already holds a 20 percent shareholding in Engen through its   
wholly owned subsidiary AER. Therefore, after the share capital of Engen is     
doubled as a result of the transaction, Worldwide"s shareholding (held through  
AER) in the joint venture will be 12,5 percent.                                 
Accordingly, Sasol and Petronas will each have a 37,5 percent share in the joint
venture and together AER and Tshwarisano will own 25 percent of the joint       
venture and will have the associated rights and obligations as set out in the   
shareholders agreement.                                                         
Upon closing of the transaction, Engen Limited will be renamed Uhambo Oil       
Limited.                                                                        
7.   Definitive agreements                                                      
The Shareholders and Engen have signed a share-for-share exchange agreement,    
which regulates the formation of the joint venture, as well as a shareholders"  
agreement regulating the relationship between the joint venture"s shareholders. 
The Component Supply Agreement in respect of the sale of liquid fuels components
by Sasol Synfuels to Sasol Oil has been updated accordingly. In addition, Brand 
licence and Intellectual Property agreements which regulate the terms and       
conditions of the license of the Sasol brand and intellectual property provided 
to the joint venture have been finalised.                                       
The key terms of the agreements include a change of control provision whereby   
each of Sasol and Petronas" shareholdings in the joint venture could be acquired
by the other at fair value if more than 50 percent of Sasol or Petronas" shares 
are acquired by a third party. The agreements also set out customary pre-emption
rights and a put provision granted by Sasol in favour of PICL, limited          
representations and warranties, deadlock breaking mechanisms, non-compete       
provisions and standstill provisions which in general prevent Sasol and Petronas
from selling their shareholdings within two years.                              
8.   Suspensive conditions                                                      
The transaction is subject to the following suspensive conditions: the relevant 
competition authorities approving the transaction without imposing any material 
conditions, no change of control of Sasol or Petronas occurring between signing 
and closing and no material adverse change having occurred since signing.       
9.   Total"s option                                                             
In terms of the Shareholders" Agreement between Sasol and Total South Africa    
(Pty) Ltd ("Total"), Total has an option to increase its shareholding in Natref 
up to 50 percent, at a fair market value and upon the occurrence of certain     
events. The approval of the proposed transaction by the Sasol Limited Board     
resulted in the triggering of Total"s option to increase its shareholding.      
10.  Pro forma financial effects                                                
The unaudited pro forma financial effects are presented for illustrative        
purposes only, and, by reason of the assumptions set out in the notes below, may
not fairly present Sasol"s financial position and results of operations. The    
directors of Sasol are responsible for the preparation of the pro forma         
financial effects.                                                              
                         Per Sasol ordinary                                     
                         share (cents)                                          
Before the    After the  Percentage                    
                         joint         joint      change (%)                    
                         venture (1)   venture                                  
                         (cents)       (2)                                      
(cents)                                  
Net asset value per      5731          5957       3,9                           
share                                                                           
Earnings per share       974           948        (2,7)                         
Headline earnings per    934           918        (1,7)                         
share                                                                           
Notes:                                                                          
The pro forma financial results (cents per ordinary Sasol share) are based on:  
1) the published results of Sasol for the year ended 30 June 2004 and the       
unpublished pro forma results of Engen for the year ended 31 March 2004(after   
adjusting for the results of Energy Africa Limited, which has been sold by Engen
and is excluded from this transaction).                                         
2) the assumption that the transaction was effected on 1 July 2003 and included 
the results of Engen for the period 1 April 2003 to 31 March 2004.              
3) the formation of the joint venture being effected at the respective book     
values of Sasol  LFB and Engen.                                                 
4) the inclusion of once-off external transaction costs.                        
5) a 98 percent shareholding of Sasol in Sasol LFB (effective 49 percent        
interest in Uhambo) and that the Sasol BEE participation envisaged above is     
still in the process of being finalised.                                        
Included in the above pro forma calculation was 2004 pro forma turnover of R33  
040 million and 2004 pro forma earnings of R1 201 million for the joint venture,
based on the unpublished pro-forma results of Engen for the year ended 31 March 
2004 and that of Sasol LFB for the year ended 30 June 2004.                     
It is anticipated that the transaction will be marginally earnings enhancing for
Sasol in the 2005 financial year, with improvements anticipated thereafter as   
synergies are realised and up-front integration costs have been expensed.       
11.  Timetable                                                                  
The operative date of the transaction will arise once the suspensive conditions 
outlined above have been fulfilled. This is currently anticipated to be in the  
first half of calendar year 2005.                                               
WITHDRAWAL OF CAUTIONARY                                                        
Shareholders are advised that caution is no longer required to be exercised when
dealing in Sasol"s securities.                                                  
Johannesburg                                                                    
2 November, 2004                                                                
Advisers                                                                        
Dresdner Kleinwort Wasserstein Limited ("Dresdner Kleinwort Wasserstein") is    
acting as financial adviser to Sasol and Petronas on this transaction. Edward   
Nathan & Friedland (Pty) Ltd is acting as legal adviser to Sasol and Mallinicks 
Inc. and Freshfields Bruckhaus Deringer are acting as legal adviser to Petronas.
Rand Merchant Bank, a division of First Rand Bank Limited, and Iklwa Structured 
Financial Products (Pty) Ltd are acting as transaction advisers to Worldwide and
Fluxmans Inc. is acting as attorney to Worldwide.                               
Sponsor to Sasol Limited                                                        
Deutsche Securities (SA) Proprietary Limited                                    
Disclaimers                                                                     
Disclaimer - Sasol Limited                                                      
Sasol Limited may in this document make statements that are not historical facts
and relate to analyses and other information based on forecasts of future       
results and estimates of amounts not yet determinable. These are forward-looking
statements as defined in the U.S. Private Securities Litigation Reform Act of   
1995.  Words such as "believe", "anticipate", "expect", "intend", "seek",       
"will", "plan", "could", "may", "endeavour" and "project" and similar           
expressions are intended to identify such forward-looking statements, but are   
not the exclusive means of identifying such statements. By their very nature,   
forward-looking statements involve inherent risks and uncertainties, both       
general and specific, and there are risks that predictions, forecasts,          
projections and other forward-looking statements will not be achieved. If one or
more of these risks materialize, or should underlying assumptions prove         
incorrect, actual results may be very different from those anticipated. The     
factors that could cause Sasol"s actual results to differ materially from the   
plans, objectives, expectations, estimates and intentions expressed in such     
forward-looking statements are discussed more fully in Sasol"s annual report    
under the Securities Exchange Act of 1934 on Form 20-F filed on October 29, 2004
and in other filings with the United States Securities and Exchange Commission. 
Forward-looking statements apply only as of the date on which they are made, and
Sasol do not undertake any obligation to update or revise any of them, whether  
as a result of new information, future events or otherwise.                     
Disclaimer - Dresdner Kleinwort Wasserstein                                     
Dresdner Kleinwort Wasserstein which is authorised and regulated in the United  
Kingdom by The Financial Services Authority is acting for Sasol and Petronas in 
relation to the transaction and is not advising any other person, and           
accordingly will not be responsible to anyone other than Sasol and Petronas for 
providing the protections afforded to customers of Dresdner Kleinwort           
Wasserstein or for providing advice in relation to the transaction.             
Date: 02/11/2004 08:00:13 AM Supplied by www.sharenet.co.za                     
Produced by the JSE SENS Department                                             
                                                                                
                                                                                
                                                                                



                                        
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