Go Back Email this Link to a friend


Ssl - Sasol Limited - Announcement Of A 10% Black Economic Empowerment

Release Date: 10/09/2007 07:06:02      Code(s): SOL
SSL - Sasol Limited - Announcement Of A 10% Black Economic Empowerment          
Transaction                                                                     
SASOL LIMITED                                                                   
INCORPORATED IN THE REPUBLIC OF SOUTH AFRICA                                    
(REG NO.: 1979/003231/06)                                                       
SHARE CODE JSE: SOL                                                             
NYSE: SSL                                                                       
ISIN: ZAE000006896                                                              
US8038663006                                                                    
("Sasol")                                                                       
ANNOUNCEMENT OF A 10% BLACK ECONOMIC EMPOWERMENT TRANSACTION                    
1.   INTRODUCTION                                                               
    Sasol intends to undertake a major broad-based Black Economic Empowerment   
    ("BEE") transaction with skills development and capacity building as a      
    central theme.                                                              
Subject to shareholder approval and the fulfilment of the conditions listed 
    in paragraph 6, it is proposed that Sasol will conclude a BEE transaction   
    in respect of 10% of its issued share capital ("the BEE transaction")       
    funded through a combination of equity, third party funding and             
facilitation by Sasol. As the BEE transaction will be implemented at the    
    Sasol Limited level, the BEE participants will benefit from Sasol`s South   
    African and non-South African operations.                                   
    As a major participant in the South African economy, Sasol welcomes the     
role that it can play in helping to meet the country`s socio-economic       
    objectives, as outlined in the Accelerated and Shared Growth Initiative for 
    South Africa (AsgiSA).                                                      
    Sasol is committed to advancing these empowerment initiatives in ways that  
are sustainable, credible and of benefit to all its stakeholders and to the 
    country as a whole. By focusing on broad-based empowerment, skills          
    development and capacity building, this transaction will go to the heart of 
    these objectives.                                                           
The proposed BEE transaction is designed to provide long term, sustainable  
    benefits to all participants and will have a tenure of ten years. It is     
    proposed to comprise the following four participant groupings (collectively 
    referred to as the "BEE participants") with their respective beneficial     
ownership in Sasol:                                                         
    -    broad-based black South African public (the "black public") - 3,0%;    
    -    selected BEE groups (the "selected participants") - 1,5%;              
    -    all Sasol employees, black and white, below managerial level that are  
permanently resident in South Africa (comprising 60% black and 40%     
         white employees), ("Sasol employees") and Sasol black managers and     
         black non-executive directors - 4,0%; and                              
    -    Sasol Foundation (the "Sasol Foundation") - 1,5%.                      
At the closing share price of R285 on 5 September 2007, the BEE transaction 
    has a value of approximately R17,9 billion, which will make it the largest  
    single broad-based BEE ownership transaction in South Africa to date.       
    In ensuring that the BEE transaction supports the full principles of broad- 
based BEE, Sasol, in conjunction with the National Empowerment Fund (the    
    "NEF"), are working together on ways in which the NEF can participate in    
    facilitating the broad-based public offer.                                  
2.   DETAILS OF THE PROPOSED BEE TRANSACTION                                    
2.1  Rationale and principles for the BEE transaction                           
    In line with Sasol`s empowerment objectives, this BEE transaction has been  
    designed to provide long term benefits to a broad group of  black South     
    Africans,  with a focus on lower income groups, particularly women.         
In order to structure the BEE transaction efficiently, Sasol will be guided 
    primarily by the following principles:                                      
    -    from inception, the vesting of full voting and economic rights in      
         respect of 10% of the issued share capital of Sasol to the BEE         
participants, through separate investment entities;                    
    -    focusing on broad-based BEE groups with significant involvement of     
         broad-based women`s groups;                                            
    -    enabling active involvement of selected participants in Sasol`s        
transformation, skills and capacity building programmes;               
                                                                                
    -    creating a Sasol Foundation, which will focus on community development 
         and promoting skills and capacity development in South Africa;         
-    achieving a sustainable BEE transaction at a realistic economic cost   
         (inclusive of any dilution) to Sasol`s ordinary shareholders;          
    -    ensuring compliance with the letter and spirit of the Broad-Based      
         Black Economic Empowerment Codes of Good Practice ("Codes of Good      
Practice"); and                                                        
    -    broadening ownership in Sasol amongst its employees.                   
2.2  BEE participants                                                           
    Black public                                                                

    This participant grouping will allow all black South Africans an attractive 
    opportunity to participate in the economy through the BEE transaction.      
    Accordingly, all black South African citizens (as envisaged in the Codes of 
Good Practice) and black-owned entities will be eligible to participate     
    through a public share offer.                                               
    The black public will benefit from 3,0% of the issued share capital of      
    Sasol.                                                                      
Selected participants                                                       
                                                                                
    This participant grouping will play an important role in furthering Sasol`s 
    transformation, skills and capacity building programmes.                    
A request for expression of interest from BEE groups will be published      
    shortly. In selecting participants, Sasol will give preference to, amongst  
    others:                                                                     
    -    BEE groups that are currently involved in Sasol`s business (including  
unions, franchisees, customers and suppliers);                         
    -    broad-based BEE groups focusing on the broader empowerment objectives  
         and in particular those focusing on capacity and skills development,   
         preferably in the fields of science and technology;                    
-    broad-based BEE groups focusing on community upliftment projects in    
         the vicinity of Sasol`s main plants in South Africa, namely Secunda    
         and Sasolburg; and                                                     
    -    broad-based black women`s groups that fit the characteristics outlined 
above.                                                                 
    Selected participants will benefit in aggregate from 1,5% of the issued     
    share capital of Sasol.                                                     
    Sasol employees, Sasol black management and black non-executive directors   
This participant grouping is intended to broaden ownership in Sasol among   
    its employees and to spread a significant portion of the benefit of the BEE 
    transaction amongst Sasol employees to ensure the sustained success of      
    Sasol.                                                                      
Black and white Sasol employees, below managerial level, will participate   
    through an employee share ownership scheme (the "Broad-Based Employee       
    Scheme"). These employees will be allocated an equal number of shares. This 
    scheme will benefit from 3,7% of the issued share capital of Sasol of       
which, (at current employment ratios), 2,2% relates to black employees and  
    1,5% to white employees.                                                    
    Sasol black management and black non-executive directors will participate   
    in the BEE transaction through two separate employee share ownership        
schemes, namely the "Black Management Scheme" and the "Black Non-Executive  
    Director Scheme", respectively. The participation in these two schemes will 
    collectively comprise 0,3% of the issued share capital of Sasol.            
    The Broad-Based Employee Scheme, Black Management Scheme and Black Non-     
Executive Director Scheme are collectively referred to as "the Employee     
    Scheme".  In terms of the Employee Scheme, participants will acquire a      
    vested right to receive ordinary shares (the "allocated shares") in Sasol,  
    which rights will vest at the inception of the Employee Scheme.  These      
participants will not be required to make any equity contributions and will 
    become entitled, from inception, to 50% of all dividends paid in respect of 
    their respective allocated shares.                                          
    Sasol Foundation                                                            
The primary focus of the Sasol Foundation is capacity building of black     
    South Africans, predominantly in the fields of science and technology.      
    This is a crucial contribution by Sasol to the establishment of skilled     
    people to support Sasol`s and South Africa`s transformation objectives.     
The Sasol Foundation will also focus on community upliftment projects in    
    the vicinity of Sasol`s main plants at Secunda and Sasolburg.               
    This foundation`s life will extend beyond the term of the transaction to    
    become a lasting contributor to community upliftment.                       
The Sasol Foundation will benefit from 1,5% of the issued share capital of  
    Sasol.                                                                      
3.   STRUCTURE AND FINANCING OF THE BEE TRANSACTION                             
3.1  Guiding principles                                                         
The structure and financing of the BEE transaction will be guided by the    
    following principles:                                                       
    -    creating a sustainable BEE transaction that is acceptable to all       
         stakeholders;                                                          
-    categorising BEE participants according to common characteristics and  
         objectives;                                                            
    -    maintaining adequate governance structures within each BEE participant 
         grouping to ensure that, inter alia, all contractual and financial     
obligations can be met.                                                
3.2  Ownership structure and financing                                          
3.2.1     Ownership structure                                                   
    In order to facilitate the financing of the BEE transaction and to ensure   
sound governance of such funding arrangements, a number of investment       
    entities will be established.  These entities will hold the interests of    
    BEE participant groupings in the issued share capital of Sasol. The BEE     
    participants will, from inception, have full voting and economic rights     
associated with the respective investment entities` interests in the issued 
    share capital of Sasol.                                                     
    Percentage ownership in Sasol is shown throughout this announcement after   
    implementation of the BEE transaction and the intended share repurchases    
referred to in paragraph 4 below.                                           
3.2.2 Financing                                                                 
    Due to the size of the proposed BEE transaction and market constraints on   
    the availability of third party funding, the BEE transaction will be        
financed through an optimal combination of equity, third party funding and  
    Sasol facilitation.                                                         
    The Selected Participants and Black Public investment entities will be      
    funded by way of equity contributions and third party funding (external     
preference shares), with appropriate Sasol facilitation.  The Employee      
    Scheme investment entity and the Sasol Foundation will be funded entirely   
    through Sasol facilitation.                                                 
    Preferred ordinary shares                                                   
In order to maximise the quantum of external preference shares issued to    
    third party funders, Sasol will create a new class of unlisted shares,      
    namely preferred ordinary shares with a fixed cumulative dividend right.    
    Sasol will issue 28,2 million of these preferred ordinary shares, equal to  
4,5% of Sasol`s total issued share capital, to the Black Public investment  
    entity (3,0%) and the Selected Participant investment entity (1,5%).        
    It is intended that these shares will carry a fixed cumulative preferred    
    dividend right for a period of ten years. This fixed preferred dividend     
right will rank ahead of the dividend rights of existing ordinary shares.   
    In all respects, other than the fixed preferred dividend rights, the        
    preferred ordinary shares will rank equal to the existing Sasol ordinary    
    shares.  After ten years, preferential treatment will cease and these       
shares will be identical to Sasol ordinary shares and will then be listed   
    on the JSE Limited as ordinary shares.                                      
3.2.2.1 Black public                                                            
    The black public will participate through an unlisted entity, (the "Black   
Public investment entity"). The Black Public investment entity will         
    subscribe for 18,8 million Sasol preferred ordinary shares (equivalent to   
    3,0% of the Sasol issued share capital).                                    
    The black public will be required to hold their shares in the Black Public  
investment entity for a minimum period of five years.  It is envisaged that 
    a market will then be created to enable the black public to trade their     
    shares in the Black Public investment entity with other black South         
    Africans. At the end of the transaction, the Black Public investment entity 
will distribute the remaining Sasol ordinary shares, after all associated   
    outstanding obligations have been settled, to the black public.             
    It is envisaged that the Sasol preferred ordinary shares owned by the Black 
    Public investment entity will be financed through:                          
-    equity contributions from members of the black public;                 
    -    third party funding in the form of preference shares with no recourse  
         to Sasol; and                                                          
    -    third party funding in the form of preference shares with Sasol        
facilitation, subject to section 38 of the Companies Act, 1973, being  
         amended.                                                               
3.2.2.2 Selected participants                                                   
    The selected participants will participate through an unlisted entity (the  
"Selected Participants investment entity"). The Selected Participants       
    investment entity will subscribe for 9,4 million Sasol preferred ordinary   
    shares (equal to 1,5% of Sasol`s issued share capital).                     
    It is envisaged that the Sasol preferred ordinary shares owned by the       
Selected Participants investment entity will be funded and issued on a      
    similar basis to the Black Public investment entity described above.        
    The selected participants will be required to hold their shares in the      
    Selected Participants investment entity for the duration of the             
transaction.  At the end of that period, the Selected Participants          
    investment entity will distribute the remaining Sasol ordinary shares,      
    after all associated outstanding obligations have been settled, to the      
    selected participants.                                                      
3.2.2.3 Employee Scheme                                                         
    The Employee Scheme investment entity will subscribe for 4% (25,1 million)  
    of Sasol`s ordinary shares at a minimum value ("nominal value").   At the   
    end of the transaction period, Sasol will have an option to repurchase a    
number of the shares determined in accordance with a formula at the same    
    nominal value ("repurchase option").                                        
    To ensure flow-through of benefits to participants from inception, the      
    Employee Scheme investment entity will receive 50% of dividends declared    
with respect to the Sasol ordinary shares held, which dividends will be     
    distributed to Sasol employees, Sasol black management and black non-       
    executive directors.  At the end of the transaction, these participants     
    will also receive their respective allocated shares remaining after the     
repurchase option has been exercised.                                       
    The formula in respect of the repurchase option takes into consideration:   
                                                                                
    -    the market value of the Sasol ordinary shares issued at inception of   
the BEE transaction is escalated by a growth factor of approximately   
         11,5% per annum;                                                       
    -    the value of 50% of the dividends, which do not accrue to the Employee 
         Scheme investment entity; and                                          
-    the Sasol ordinary share price at the end of the transaction.          
3.2.2.4   Sasol Foundation                                                      
    The Sasol Foundation will subscribe for 1,5% (9,4 million) of Sasol`s       
    issued ordinary shares at a nominal value. It is envisaged that the Sasol   
Foundation will be a public benefit organisation.                           
    The Sasol Foundation will be financed through a similar structure as the    
    Employee Scheme investment entity described above.                          
4.   Share repurchase programme to mitigate dilution                            
Pursuant to the general authority from its shareholders, Sasol, through a   
    wholly owned subsidiary, has repurchased 14,9 million Sasol ordinary shares 
    (2,4% as at 30 June 2007).  Sasol may recommence its repurchase programme   
    after the release of its annual results.  Share repurchases will be funded  
from available cash.                                                        
    The BEE transaction will require the issue of 34,5 million Sasol ordinary   
    shares and 28,2 million Sasol preferred ordinary shares to the BEE          
    participants. To mitigate dilution to existing ordinary shareholders, Sasol 
intends to repurchase an equivalent number, 62,7 million, of Sasol ordinary 
    shares. To the extent that prior to the announcement of the remaining terms 
    of the BEE transaction, the number of ordinary shares held by the Sasol     
    wholly owned subsidiary, which has undertaken the repurchase programme, is  
less than 62,7 million Sasol ordinary shares, Sasol will consider a share   
    repurchase by way of a scheme of arrangement in terms of Section 311 of the 
    Companies Act, 1973,("the scheme"). If the scheme is approved by the        
    shareholders, they will sell to Sasol a pro rata portion of their shares at 
the prevailing market price. The scheme shares will be acquired by a Sasol  
    wholly owned subsidiary from available cash.                                
5.   Illustrative financial effects                                             
    The unaudited pro forma financial information of Sasol was prepared in      
order to provide the illustrative financial effects of the BEE transaction  
    and intended share repurchase programme on Sasol, assuming that the BEE     
    transaction and share repurchases had been fully implemented on 1 July      
    2006. The unaudited pro forma financial effects are based on the            
assumptions set out below and include assumptions on share price and        
    funding costs, which can only be determined in the future.                  
    The unaudited pro forma financial information is the responsibility of the  
    directors of Sasol and was prepared for illustrative purposes only and may  
not, because of its nature, fairly present Sasol`s financial position,      
    changes in equity and results of its operations or cash flows. It does not  
    purport to be indicative of what the financial results would have been, had 
    the BEE transaction and share repurchases occurred on a different date.     
Unaudited pro forma financial information per share before and after the    
    implementation of the BEE transaction and intended share repurchases is set 
    out in the table below:                                                     
                                                                                
Before After  Percenta              
                                                          ge                    
                                                          change                
                                                          (%)                   
Attributable earnings per               2 735  2 406  (12,0)                
    share3                         cents                                        
    Attributable earnings per               2 735  2 765  1,1                   
    share (excluding the share-                                                 
based payment expense)4        cents                                        
    Diluted earnings per share     cents    2 702  2 374  (12,1)                
    Headline earnings per share5   cents    2 537  2 191  (13,6)                
    Net asset value per share6     cents    10 055 8 582  (14,6)                
Net tangible asset value per            9 857  8 367  (15,1)                
    share6                         cents                                        
    Weighted average number of              622,6  574,8  (7,7)                 
    shares in issue7               million                                      
Weighted average diluted                630,3  582,5  (7,6)                 
    number of shares in issue7     million                                      
    Number of shares in issue               612,8  565,0  (7,8)                 
    (excluding share repurchase)   million                                      
7                                                                           
Notes and assumptions:                                                          
1.   The unaudited pro forma financial information is based on the audited      
    financial position of the Sasol Group as of 30 June 2007 and the results of 
its operations for the year ended 30 June 2007.                             
2.   The unaudited pro forma financial information per share after the BEE      
    transaction and intended share repurchase programme are based on the        
    following assumptions:                                                      
(a)  the BEE transaction and share repurchase programme were implemented with   
    effect from 1 July 2006 for calculation of the income statement effects and 
    on 30 June 2007 for calculation of the balance sheet effects;               
(b)  34,5 million Sasol ordinary shares were issued, at nominal value, to the   
Employee Scheme and the Sasol Foundation. 28,2 million Sasol preferred      
    ordinary shares were issued, at the closing share price of  R285 on 5       
    September 2007, to the Selected Participants and Black Public investment    
    entities;                                                                   
(c)  the Employee Scheme, Sasol Foundation, Selected Participants and Black     
    Public investment entities are consolidated for accounting purposes.  In    
    this regard any shares issued to these entities are regarded as treasury    
    stock;                                                                      
(d)  the 47,8 million Sasol ordinary shares repurchased at the closing share    
    price of  R285 on 5 September 2007, in terms of the intended share          
    repurchase programme are treated as treasury stock;                         
(e)  the fixed preferred ordinary dividend, which is payable in respect of the  
28,2 million Sasol preferred ordinary shares amounts to approximately       
    R17,35 per share; and                                                       
(f)  the finance cost applicable to the implementation of the BEE transaction   
    and the intended share repurchase programme, for the twelve months ended 30 
June 2007, is based on the relevant prevailing market rates.                
3.   Attributable earnings per share are computed by dividing attributable      
    earnings by the weighted average number of shares in issue after taking     
    into account the effect of the intended share repurchase programme.         
4.   In accordance with International Financial Reporting Standard 2 - Share-   
    based Payment (IFRS 2), attributable earnings for the year ended 30 June    
    2007 has been adjusted by R2,1 billion, assuming shares were issued to the  
    BEE participants at the closing share price of R285 on                      
5 September 2007. The share-based payment expense is calculated based on    
    prevailing market conditions and changes in these conditions can give rise  
    to material movements in this expense.                                      
    The share-based payment expense includes R0,1 billion relating to the       
Employee Scheme.  The total share-based payment expense associated with the 
    Employee Scheme amounts to R1,1 billion, which will be expensed in the      
    income statement over the period of ten years.  The total share-based       
    payment expense for the BEE transaction, therefore amounts to R3,1 billion. 
5.   Headline earnings are calculated in accordance with the requirements of    
    Circular 8/2007 - Headline Earnings.                                        
6.   Net asset value per share and net tangible asset value per share have been 
    calculated after taking into account the shares repurchased.                
Due to the consolidation of the Selected Participants and Black Public      
    investment entities, the effect of third party funding (external preference 
    shares) raised by these entities has been taken into account in the         
    calculation of the net asset value and net tangible asset value per share   
after the BEE transaction.                                                  
7.   Share repurchases are excluded from the weighted average number of shares  
    and the number of shares in issue after implementation of the BEE           
    transaction and repurchase programme. The weighted average number of shares 
also excludes the shares issued to the Employee Scheme, Sasol Foundation,   
    Selected Participants and Black Public investment entities, which shares    
    are treated as treasury stock.                                              
8.   Sasol complies with the requirements of AC 503 - Accounting for Black      
Economic Empowerment Transactions and Circular 8/2006 - Disclosure of       
    Accounting for Black Economic Empowerment Transactions.                     
6.   CONDITIONS PRECEDENT                                                       
    The implementation of the proposed BEE transaction will be subject, inter   
alia, to the following:                                                     
-    obtaining Sasol shareholder approval for the BEE transaction, including the
    scheme;                                                                     
-    finalising the selection of the BEE groups;                                
-    concluding the financing agreements with third party funders;              
-    concluding agreements with all other relevant parties;                     
-    obtaining the requisite regulatory approvals; and                          
-    compliance with all applicable laws and regulations.                       
The external funding in the form of preference share capital with Sasol     
    facilitation is based on the assumption that the amendment of section 38 of 
    the Companies Act, 1973 will become law  before the further announcement    
    referred to in paragraph 7 below is made. Should section 38 not be amended  
prior to such an announcement being made, an alternative funding            
    arrangement will be announced at that time.                                 
7.   FURTHER ANNOUNCEMENT EXPECTED IN FIRST HALF OF 2008                        
A further announcement will be made during the first half of 2008 after the     
relevant agreements have been signed and third party financing arrangements 
    have been finalised. Such announcement will provide the detailed terms of   
    the BEE transaction, including the scheme, financial effects and expected   
    economic costs of the BEE transaction, which cost is anticipated to be      
comparable to other BEE transactions concluded to date.                     
Rosebank                                                                        
10 September 2007                                                               
Sponsor                                                                         
Deutsche Securities (SA) (Pty) Limited                                          
Merchant bank and transaction sponsor                                           
RAND MERCHANT BANK                                                              
(A division of FirstRand Bank Limited)                                          
Legal adviser                                                                   
Edward Nathan Sonnenbergs Inc                                                   
Disclaimer - Forward-looking statements                                         
We 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. There 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 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 our actual       
results to differ materially from the plans, objectives, expectations, estimates
and intentions expressed in such forward-looking statements are discussed more  
fully in our annual report under the Securities Exchange Act of 1934 on Form 20-
F filed on November 2, 2006 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 does not undertake any obligation to  
update or revise any of them, whether as a result of new information, future    
events or otherwise.                                                            
The Sasol shares that will be allocated in terms of the BEE transaction have not
been and will not be registered with the United States Securities and Exchange  
Commission under the US Securities Act of 1933, as amended, or any securities   
laws of any state of the United States and may not be offered or sold in the    
United States absent an exemption from registration requirements.               
Date: 10/09/2007 07:06:01 Supplied by www.sharenet.co.za                     
Produced by the JSE SENS Department                             .                  
The SENS service is an information dissemination service administered by the    
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or            
implicitly, represent, warrant or in any way guarantee the truth, accuracy or   
completeness of the information published on SENS. The JSE, their officers,     
employees and agents accept no liability for (or in respect of) any direct,     
indirect, incidental or consequential loss or damage of any kind or nature,     
howsoever arising, from the use of SENS or the use of, or reliance on,          
information disseminated through SENS.                                          



                                        
Email this JSE Sens Item to a Friend.

Send e-mail to
© 2017 SHARENET (PTY) Ltd, Cape Town, South Africa
Home     Terms & conditions    Privacy Policy
    Security Notice    Contact Details
Market Statistics are calculated by Sharenet and are therefore not the official JSE Market Statistics. The calculation/derivation may include underlying JSE data.