Sasol looks to sell stake in $13bn Lake Charles project

By Andrew Noël, Loni Prinsloo and Paul Burkhardt

(Bloomberg) – Sasol is looking to sell a large stake in its $13bn chemical complex in the US, as the South African energy producer moves to shore up finances amid an historic rout in the oil market, according to people with knowledge of the matter.

The company has hired Bank of America Corp. to help find a buyer for a minority stake in the Lake Charles chemical project, said the people, who asked not to be identified because the matter is private. Sasol previously indicated it was considering a partial sale of its US base-chemicals business to avoid a last-resort rights issue.

Sasol would prefer finding an industrial partner for the stake and may structure any deal as a joint venture, one of the people said. The goal is to reach a deal by June, the person said.

Sasol wasn’t immediately able to comment. A representative of Bank of America declined to comment.

The move to find a buyer highlights Sasol’s need for cash as it struggles with debt taken on to develop the Lake Charles complex in Louisiana, originally seen as a way to become a global operator and diversify away from oil. Its cost has more than doubled since early estimates to almost $13 billion, while the current crash in oil prices has choked off revenue and taken the company to the brink.

Sasol shares have been in freefall since investors saw pressure building on the balance sheet, sliding 82% this year. They rose as much as 2.1% on Tuesday after news of the planned Lake Charles stake sale, before trading 1.1% lower at the close in Johannesburg.

Sasol said last month it plans to raise $6bn by the end of its 2021 financial year, mainly through asset sales, as it seeks to reduce net debt of about $10bn. The company left open the possibility of selling as much as $2bn of shares, and is also in negotiations with lenders to arrange greater flexibility over its repayments.

Moody’s Investors Service has downgraded the debt to junk.

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