Sasol Limited has announced its proposed new Broad-Based Black Economic Empowerment (B-BBEE) ownership structure, Sasol Khanyisa, which will be submitted for shareholder approval at the Sasol Limited AGM later this year.
Sasol Khanyisa is intended to achieve effective direct and indirect B-BBEE ownership of at least 25% in Sasol South Africa, a wholly-owned subsidiary of Sasol. Through two invitations eligible existing Sasol inzalo Groups and Public shareholders will receive bonus Sasol BEE ordinary shares (SOLBE1), that trade on the BEE segment of the JSE, at no cost to them. These bonus SOLBE1 and additional SOLBE1 shares issued to shareholders are tradeable from the date of issue, realising upfront and immediate value creation for shareholders.
"As a company proudly rooted in our South African heritage, we embrace transformation. We are committed to contributing meaningfully to sustainable transformation as we accelerate this journey across Sasol," said Bongani Nqwababa, Joint President and Chief Executive Officer, Sasol Limited.
"In designing Sasol Khanyisa, we included several key design principles that would enable our objectives - specifically, to ensure that the transaction will deliver long-term value and lead to sustainable ownership of Sasol by Black South African shareholders," said Stephen Cornell, Joint President and Chief Executive Officer, Sasol Limited.
Sasol Khanyisa is a key milestone in Sasol's transformation journey. Sasol Inzalo, which was created in 2008, comes to an end in 2018. Eligible participants in Sasol Khanyisa will comprise Sasol's qualifying employees, existing Sasol Inzalo Public and Groups shareholders, and existing Black Sasol shareholders that own shares listed on the empowerment segment of the JSE.
Black members of the public participated in Sasol Inzalo through 54 different groups. In addition, more than 200 000 members of the South African Black public participated in the Inzalo Public Funded element and Sasol Limited has more than 50 000 SOLBE1 shareholders. Approximately 23 000 Sasol employees participated in the Sasol Inzalo employee trusts.
When Sasol Inzalo ends next year, it is expected that there will be no distribution of Sasol shares to participants, given the closing Sasol Ordinary share price of R389 on 4 September 2017.
Sasol South Africa is well placed to achieve at least 25% Black ownership, and a proportional share of the dividend stream from Sasol South Africa will be used to repay the funding cost.
"This means Sasol Khanyisa's success is not dependent on Sasol Limited's share price fluctuations. As no external funding will be used, there will be no cash outflows from Sasol," added Nqwababa.
In February 2018, eligible participants will be invited to keep Sasol BEE Ordinary (SOLBE1) shares on the empowerment segment of the JSE and receive the following should they elect to keep the SOLBE1 designation:
- Receive one bonus SOLBE1 share for every four SOLBE1 shares owned; and
- Be invited to participate in Sasol Khanyisa.
Thereafter, in April 2018, eligible Sasol BEE Ordinary shareholders (SOLBE1) and Sasol Inzalo Groups and Public funded shareholders will be invited to participate in Sasol Khanyisa and receive the following:
- One Sasol Khanyisa Public share for every Sasol Inzalo share held; and
- One Sasol BEE Ordinary share for every 10 Sasol Khanyisa Public shares held.
These bonus SOLBE1 and additional SOLBE1 shares issued to shareholders are tradeable from the date of issue.
At the end of the 10 year period and once the vendor funding has been settled, Sasol Khanyisa Public shares will be exchanged for SOLBE1 shares listed the empowerment segment of the JSE. This will lead to long-lasting, unencumbered ownership of Sasol Limited by Black South Africans.
Participants in the Sasol Khanyisa employee share ownership plan will receive a debt-free share grant of Sasol ordinary shares and Sasol shares listed on the empowerment segment of the JSE worth R100 000. These shares, subject to taxation, will become theirs to keep or sell at the end of a three-year period, in 2021. Participating employees will also receive a pro rata portion of dividends received by the Sasol Khanyisa trust during the three-year period.
"To accelerate transformation, Sasol Khanyisa has been designed to empower Black employee participants with 'rights to shares'," said Cornell. These rights to shares, to be held in a trust, will be exchanged for Sasol shares listed on the empowerment segment of the JSE at the end of a 10-year period, after which employees will be able to freely trade these shares or retain them as Sasol shareholders.
The Sasol Inzalo Foundation will be renamed and will continue as a public benefit organisation, driving excellence in science, technology, engineering and mathematics (STEM) education at all levels of the education value chain. The Sasol Inzalo Foundation benefitted over 20 million learners in South African public schools by way of 118 natural science, technology and mathematics school work books that were developed. In addition, more than 800 bursaries and fellowships have been awarded to students at 16 South African universities, to name but a few examples.
Sasol Khanyisa's ownership structure will be subject to shareholder approval later this year.
"At Sasol, we believe that Broad-Based Black Economic Empowerment is a key enabler for economic transformation and inclusive growth, and is important for South Africa's long-term sustainability," Cornell said. "Sasol Khanyisa is an important vehicle for transformation of the company, which we view as a strategic, business and social imperative."