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Johannesburg – Energy and chemicals group Sasol [JSE: SOL] has signed a $3.9bn five-year credit facility.
According to a note to shareholders issued on Thursday, the initial target was $3bn but due to oversubscription, it increased to $3.9bn. The revolving credit facility includes two further extension options of one year each.
Chief financial officer Paul Victor, who was speaking at Sasol’s Capital Markets Day in Sandton on Thursday, said the credit facility would help with liquidity and refining the group's debt.
Citi and Mizuho Bank were mandated by Sasol to launch the transaction to a targeted group of banks earlier in November. The transaction was oversubscribed by 17 banks, which led Sasol to increase the facility.
The banks included Bank of America Merrill Lynch, BNP Paribas South Africa, JP Morgan Securities, Barclays Bank, HSBC, Deutsche Bank, Societe Generale and Standard Chartered Bank.
During the presentation, Victor gave the assurance that the group would remain committed to disciplined capital allocation.
“We will not borrow money like you cannot believe,” he told journalists at a briefing on Wednesday. The group will ensure prudent risk management as it executes projects.
Borrowings are to be limited to a certain level. Gearing, or net debt to equity, will remain within a range of between 20% and 40%, with the target being 30%. Liquidity will not be lower than 1x and not higher than 1.7x in an effort to maintain its investment grade ratings, he added.
Sasol is hosting two Capital Markets Days. The second will be held in New York at the end of the month, to inform investors of the group’s new long-term strategy.
The share price lifted 1.63% to trade at R442.22 following the announcement of the new strategy. It moderated to R435 at 11:25, following the announcement on the credit facility.
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