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South Africa’s Sasol said Wednesday that its Louisiana integrated polyethylene joint venture (JV) with chemical company LyondellBasell Industries had been established following the closing of the deal on Dec. 1.
LyondellBasell agreed in October to acquire a 50% stake in Sasol’s basic chemicals business in Lake Charles for $ 2 billion and operate the newly formed 50/50 joint venture, which comprises the basic chemicals business.
The South African petrochemical company also said that it had reached an agreement with its lenders on modifying the agreement for December 31 and that the agreement for June 2021 will remain at 3 times the net debt: earnings before interest, taxes, Depreciation and amortization.
Investors have been concerned about the company’s debt, which has been compounded by delays and cost overruns at its Lake Charles Chemicals (LCCP) project in Louisiana and prompted the resignations of its joint CEOs to restore shareholder confidence.
Sasol’s total debt was R189.7 billion for the year to June 30.
Turn around
Also Wednesday, Sasol said it aims to cut annual capex by 30% over the next three to four years, as part of a restructuring strategy.
Sasol also aims to reduce fixed costs and increase gross margins.
“We need to transform the business to be cash-intensive, with a diversified asset base that generates competitive returns for our shareholders through commodity cycles and market volatility,” said CFO Paul Victor.
