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South African petrochemicals firm Sasol said on Friday that chemical company LyondellBasell Industries had agreed to acquire a 50% stake in its Lake Charles Chemical Project (LCCP) base chemicals business for R33.38 billion ($ 2 billion).
The world’s leading manufacturer of coal-based motor fuel has been struggling with high debt and lower oil and chemical prices, prompting it to seek a partner in its US basic chemicals business. And issue up to $ 2 billion in shares.
The deal will see a LyondellBasell subsidiary form a 50/50 joint venture in the LCCP Base Chemicals Business and a portion of the Lake Charles property.
“The transaction will represent a significant step toward achieving Sasol’s strategic and financial objectives by materially reducing net debt and catalyzing a rapid shift toward Sasol’s future strategy,” the company said.
The company’s total debt was R189.7 billion ($ 11.35 billion) for the year to June 30, compounded by delays and cost overruns at LCCP, prompting the resignations of its joint CEOs to restore confidence of the shareholders.
Sasol said that net debt before lease liabilities would drop from $ 10 billion to around $ 8 billion.
LCCP’s base chemicals business, which produces polyethylene and ethylene products, consists of the ethane cracker, a low-density polyethylene plant and a linear low-density polyethylene plant.
The asset value was $ 3.9 billion and it posted a loss of $ 2.3 billion for the year ended June 30, Sasol said.
The Johannesburg-listed company said it would retain ownership of the US Performance Chemicals Business, the inherited base chemical assets in Lake Charles and the remainder of the Lake Charles property.
Sasol said he expects the transaction, which is subject to shareholder approval, to be completed before the end of the year.
Read the full Sens announcement here.
