South African energy company Sasol is seeking to divest a minority stake in its $13-billion Lake Charles Chemical Project (LCCP) to strengthen finances amid persistently low oil prices. Sources with knowledge of the matter said the company had hired Bank of America Corp. for the stake sale and would prefer an industrial partner so it can structure the deal as a joint venture. One of the sources said the company aimed at securing a deal by June.
As SSESSMENTS.COM noted, Sasol’s LCCP in Louisiana has a 1.5 million tons/year cracker and some downstream plants, including a 470,000 tons/year LLDPE plant, a 420,000 tons/year LDPE plant, and a 380,000 tons/year EO/MEG plant. The project was the centrepiece of Sasol’s vision to be a global petrochemical producer and diversify away from oil.
However, it faced repeated delays including a technical issue at its cracker and an explosion that damaged its LDPE unit. Sasol shares have been tumbling 82% in 2020, as investors see pressure on its balance sheet. Meanwhile, Moody’s Investors Service downgraded Sasol’s debt to junk.
Sasol plans to raise 6 billion by the end of FY2021 mostly through divestment program as it seeks to shed some of its $10-billion debt burdens. The company is in talks with lenders for repayment flexibility and open a possibility to sell about $2 billion of shares.
