Sasol’s record plunge boosts speculation of a rights issue
JOHANNESBURG – Sasol Ltd.’s record share plunge on Monday, coming as the oil price slumped and just days after the company credit rating was cut to junk by Moody’s Investors Service, is raising concern among investors that it may need to hold a rights offer as it struggles with a debt burden of about $8 billion.
The fuel and chemicals producer, South Africa’s biggest company by sales, delayed an investor call scheduled for Tuesday until March 17, noting that its oil-price exposure for the rest of the fiscal year is not hedged. While the company had assumed oil will stay in a range of $50 to $70 a barrel, Brent crude fell as low as $31 on Monday. Its stock plunged 47% by the close in Johannesburg, giving it a market value of 53 billion rand ($3.3 billion).
“If oil prices stay close to current market levels for a long period of time, Sasol may have to consider a rights issue to fund cash shortfalls,” said Asief Mohamed, founder and chief investment officer at Aeon Investment Management in Cape Town, which holds stock in the company.
Source: iol.co.za
