Can the Industrial Development Corporation (IDC) and the Public Investment Corporation (PIC) save the day for the devastated 200 000 Sasol Inzalo investors?
The investors in the failing R30 billion Sasol Inzalo BBBEE investment scheme will be hoping that the answer to this question is yes. But a positive outcome is highly unlikely.
In between them, the IDC and the PIC (representative of the Government Employees Pension Fund) control more than 20% of Sasol shares. They have considerable muscle to sway things. They have in the past manged to discipline Sasol on the economic transformation front.
Their allegiance of the two government agencies. IDC and PIC, will be tested at the Sasol Group annual general meeting to be held on Friday the 17th of November 2017. These agencies are postured as champions of BBBEE. And they have on many occasions bended backwards to benefit some transactions that benefit the elite. In the interest if social justice, they should be seen to be supporting the course of the 200 000 mainly vulnerable Sasol Inzalo investors.
The tricky thing is; the critical consideration to save the Sasol Inzalo scheme has been removed from the agenda but the IDC suggest it is still under consideration. This is after Sasol executives and board members mishandled the matter.
On the 20th of September 2017, Sasol announced that it was going to table to shareholders a proposal to bailout Sasol Inzalo. The proposal was to issue Sasol shares and apply the proceeds of this share issue to plug the whole on the Sasol Inzalo scheme. This would ensure that the 10 years long BBBEE scheme reaches its 2018 maturity date on break even. It would make the proposition to extend the scheme for another 10 years under the name Sasol Khanyisa somewhat bearable.
But then the share issue proposal was withdrawn from the agenda in what comes across as a process management blunder. We are of the view that Sasol management should have taken this proposition to the shareholders as initially planned. Let the shareholders vote on it – reject it or accept it.
In an announcement issued on the 9th of October 2017, Sasol explained the withdrawal of the proposal as follows: “Following extensive engagement with shareholders, Sasol is now undertaking to explore, in consultation with the external banks and Inzalo FundCos, different funding options to settle the relevant financing obligations. Sasol will therefore no longer pursue the preferred funding option, as described in the First Announcement, of issuing up to 43 million ordinary shares through an accelerated book-build process.”
There are a couple of problems with this U-turn. Firstly, it subjects the Sasol Inzalo scheme to the mercy of banks who made this mess in the first place. It basically means that the deal is going to be refinanced with expensive third party funding. It means Sasol Inzalo will continue to be a front for banks for the next 10 years like it has been for the past 10 years.
Asked about its position on the matter should be settled, the IDC which holds about 8.2% of Sasol shares said: “In terms of IDC governance processes, the shareholder resolutions being requested are currently under consideration. This will form the basis of IDC’s formal position for tabling at the meeting of Sasol shareholders scheduled for the 17 November 2017.”
The PIC and GEPF could not be bothered to respond to questions after two weeks of trying. It goes to justify accusations that the worker’s funds in these institutions have been hijacked by elitist interests.
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