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Sasol Issues Notes Worth $1B

TLM SSL

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South Africa-based energy and chemicals company, Sasol Ltd. (SSL) recently announced that it will be offering 4.50% unsecured notes of $1.0 billion, due in 2022. The notes will be issued by Sasol’s subsidiary - Sasol Financing International Plc. This is the company’s first US$ Notes offering.

It is estimated that net returns from the issue will be around $985 million after discounts and expenses. Sasol will be using the proceeds from the offering for general corporate purposes and capital investments.

Sasol expects the proceedings to be complete on November 14, 2012, subject to the fulfillment of customary closing conditions.

As of June 30, 2012, Sasol generated R47.9 billion in operating cash flows and spent R29.2 billion in capital expenditure.

We also expect interest expenses to increase with the sale of the new Notes.

South Africa-based Sasol is an integrated energy and chemicals company. It is the leading provider of liquid fuels and a major international producer of chemicals. The group divides its operations in these segments: South African Energy Cluster, International Energy Cluster and Chemical Cluster.

We believe that Sasol’s deleveraged balance sheet and strong cash position keeps the group well equipped to weather the global economic storm and fund its growth program in tough credit markets.

However, we believe that the company conducts operations in many countries and is exposed to risks associated with doing business abroad. Such risks include embargoes and/or expropriation of assets, exchange rate risks, terrorism and political/civil sentiment and others.

Sasol – which has collaborated with Canadian energy explorer Talisman Energy Inc. (TLM - Analyst Report) in the latter’s gas-rich Montney shale holdings in northeastern British Columbia – currently holds a Zacks #4 Rank (short-term Sell rating).

 

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