Update on Sasol’s Credit Rating
Sasol Limited
(Incorporated in the Republic of South Africa)
(Registration number 1979/003231/06)
Sasol Ordinary Share codes: JSE: SOL NYSE: SSL
Sasol Ordinary ISIN codes: ZAE000006896 US8038663006
Sasol BEE Ordinary Share code: JSE: SOLBE1
Sasol BEE Ordinary ISIN code: ZAE000151817
(“Sasol” or “Company”)
UPDATE ON SASOL’S CREDIT RATING
Sasol notes that the credit rating agencies, S&P Global Ratings (S&P) and
Moody’s have completed their periodic review of Sasol following the release of the
company’s interim financial results for 2020.
S&P has affirmed Sasol’s BBB-/A-3 credit rating whilst Moody’s has downgraded
Sasol’s credit rating to Ba1/NP. The ratings action by Moody’s reflects Sasol’s
elevated leverage in the context of volatile market conditions.
As stated in Sasol’s recent financial results, protecting the balance sheet remains
an important priority during the peak gearing phase. In this regard, several
proactive actions have already been taken which include a measured financial risk
management programme to hedge oil and ethane commodity price and exchange
rate exposures, managing costs, increasing working capital efficiency and
agreeing additional flexibility on covenants with the lending group.
These initiatives continue to benefit the balance sheet with further actions
underway. These include re-phasing discretionary capital, ongoing delivery of the
value-driven asset disposal programme and active balance sheet management to
maintain a healthy liquidity position and a balanced debt maturity profile as Sasol
works to restore an optimal capital structure. Sasol maintains a long-term
commitment to an investment grade credit rating.
Subject to the macroeconomic environment and the impact of COVID-19 on global
product demand, Sasol continues to expect the cash flow inflection point to be
reached in the second half of FY20 and de-leveraging to start thereafter. The
overall Lake Charles Chemicals Project (“LCCP”) cost estimate is tracking
US$12,8 billion, within our previous guidance of US$12,6 - 12,9 billion. LCCP is
expected to be EBITDA positive in the second half of FY20 with a contribution of
US$50 – US$100m for FY20.
Fleetwood Grobler commented “We recognise the challenges presented by the
current market environment and acknowledge the outcomes of the rating agency
reviews. We remain focused on managing the factors within our control –
delivering safe, strong and stable operational performance and protecting the
balance sheet as we bring the Lake Charles Chemicals Project to completion and
start deleveraging. The revised rating profile is not expected to have a material
impact on our existing funding costs. As ever, we remain committed to our capital
allocation framework and priorities.”
In light of the above, Sasol management will be hosting a conference call to
discuss our approach to protecting the balance sheet on Tuesday, 10 March 2020,
at 15h00 (SA).
Conference call details:
Tuesday, 10 March 2020 Time Dial-in numbers
South Africa 15:00 +27 11 535 3600
United Kingdom 13:00 +44 (0) 333 300 1418
United States (ET) 08:00 +1 508 924 4326
Other countries +27 11 535 3600
The transcript will be available from March 13, 2020 at 6:00 PM (SA) on Sasol’s
investor relations website.
If you have any questions, please email: investor.relations@sasol.com or contact
Feroza Syed at +27 10 344 9280.
6 March 2020
Johannesburg
Sponsor: Merrill Lynch South Africa Proprietary Limited
Date: 06-03-2020 07:07:00
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.