SOUTH AFRICA – Chemicals and energy group Sasol has agreed to sell its 50% stake in US-based polyethylene business Gemini for $404m, the latest disposal as the group seeks to cut debt and avoid tapping shareholders.
Sasol intends to sell the stake to existing partner INEOS Olefins and Polymers, which operates the toll manufacturing facility in La Porte, Texas, with the parties setting a target date for concluding the transaction of the end of December.
The facility produces bimodal high-density polyethylene products, which are used in pipelines and film.
The deal follows Sasol’s announcement in October that global chemicals company LyondellBasell would acquire 50% of the Lake Charles base chemicals business for US$2billion.
“This world-class asset is positioned to serve the growing global bimodal markets and would allow our business to meet increased demand from our customers”Michael Nagle – CEO, INEOS
The two parties would also form a joint venture.
At a general meeting preceding the Sasol AGM on Friday afternoon, 99.4% of shareholders voted for the deal to go ahead.
The US$2 billion from the deal will cut net debt down from US$10billion to US$8billion.
Sasol has grappled with delays and enormous cost overruns at the US project, which has stretched the company balance sheet.
In the face of Covid-19 and low oil and chemicals prices, Sasol has accelerated efforts to cut costs and dispose of assets in a bid to avoid a potential US$2 billion rights issue.
Sasol said that the sale of the stake in Gemini “represents a further step in achieving Sasol’s strategic and financial objectives by accelerating the focus on speciality chemicals and reducing net debt”.
In July, Sasol said it had agreed to sell 16 air-separation units at its Secunda operation for US$552.5 million to French multinational Air Liquide.
INEOS is a global manufacturer of petrochemicals and speciality chemicals employing 23,000 people and has 34 businesses, with a production network spanning 183 manufacturing facilities in 26 countries.
“This world-class asset is positioned to serve the growing global bimodal markets and would allow our business to meet increased demand from our customers,” INEOS CEO Michael Nagle said in a statement.