Sasol Ltd plans to cut jobs and end West African oil operations as part of a business revamp, the petrochemicals producer said on Thursday, and has also agreed a deal with lenders to relax borrowing rules.

 

Sasol has been reviewing its business as it grapples with high debt levels, falling oil and chemical prices and lower demand due to the COVID-19 pandemic.

 

The company said that lenders agreed to waive its June debt covenant due and relax the December covenant. Under the agreement with lenders, Sasol will pay no dividends and pursue no acquisitions while its leverage is above three times net debt to EBITDA.

 

Liquidity headroom would remain well above $1 billion, Sasol said.

 

The company has identified that the future Sasol business – "Sasol 2.0" – will be focused on two core businesses, Chemicals and Energy. The revision of our strategy aims to have a greater focus on enhanced cash generation, value realisation for shareholders and business sustainability. The Chemicals Business will focus on its activities in specialty chemicals where it has differentiated capabilities and strong market positions which can be expanded over time. The Energy Business will comprise the Southern African value chain and associated assets and will pursue greenhouse gas emission reduction (GHG) through focus on gas as a key feedstock and renewables as a secondary energy source. This will be a key enabler to achieve the 2030 and longer term aspirations to shift to a lower carbon economy.

 

Sasol said the revamp would affect its workforce, but did not say how many jobs might be lost. It is seeking consultations with trade unions in South Africa and aims to do the same in other countries.