- LyondellBasell to acquire 50 percent of certain Sasol
assets in Louisiana
HOUSTON and JOHANNESBURG, Oct. 2,
2020 /PRNewswire/ -- LyondellBasell (NYSE: LYB) and Sasol
(JSE: SOL) (NYSE: SSL) today announced they have entered into a
definitive agreement to form a 50/50 joint venture (JV) through
which LyondellBasell will acquire 50 percent of Sasol's 1.5 MM ton
ethane cracker, 0.9 MM ton low and linear-low density polyethylene
plants and associated infrastructure for a total consideration of
US$2 Billion. The agreement includes
customary rights for each partner regarding the potential future
sale of its ownership interest. The JV will operate under the name
Louisiana Integrated PolyEthylene JV LLC.
"This investment represents a unique opportunity to bring
together the best of both companies and create deep, long-term
value while immediately realizing the many benefits of new,
strategically-located, world-scale assets," said Bob Patel, CEO of LyondellBasell. "This approach
is consistent with our strategy of investing in high quality assets
that meet our threshold for value creation, while also maintaining
our investment grade rating and commitment to our dividend. The
transaction is expected to be accretive to both cash flow and EPS
within one year with significant upside as market conditions
continue to improve."
"We are very pleased to have LyondellBasell join us as a key
partner in our U.S. Base Chemicals Business in Lake Charles. LyondellBasell is the ideal
partner to ensure the success of these world-class assets with its
deep expertise in commodity chemicals," said Fleetwood Grobler, President and CEO, Sasol.
"This milestone coincides with our 70-year anniversary and
represents a significant step in creating Future Sasol, which will
be a more sustainable and resilient business for the long-term.
We're excited about this joint venture and look forward to building
a mutually beneficial and successful partnership with
LyondellBasell."
Strategic and financial benefits
The JV's newly constructed assets are strategically located on
the U.S. Gulf Coast, with access to low-cost feedstock, storage and
logistics infrastructure.
LyondellBasell's investment in the JV allows the company to
expand in a core area of its business and leverages the company's
operational and commercial strengths. Additionally, by investing in
these assets, the company will realize immediate returns and
eliminate customary construction risks associated with new project
execution.
This transaction represents a significant step for Sasol in
achieving its financial and strategic objectives by reducing net
debt and rapidly shifting the company's portfolio towards specialty
chemicals. Sasol undertook a process to determine the optimal
partnership construct for its U.S. Base Chemicals Business. The
LyondellBasell proposal offered the best combination of upfront and
long-term value, consistent with Sasol's long-term strategic
priorities.
Transaction terms
Under the terms of the transaction agreements, each JV partner
will provide pro-rata shares of ethane feedstocks and will offtake
pro-rata shares of cracker and polyethylene (PE) products at cost.
LyondellBasell will operate the U.S. Base Chemicals assets on
behalf of the JV.
Upon close of the transaction, some Sasol U.S. employees will
become employees of LyondellBasell. Sasol will retain full
ownership and operational control of its Lake Charles Research and
Development complex, Lake Charles East Plant ethane cracker and
U.S. Performance Chemicals Business assets in Lake Charles, which produce Ziegler alcohols
and alumina, ethoxylates, Guerbet alcohols, paraffins, comonomers,
linear alkyl benzene, ethylene oxide and ethylene glycol. The U.S.
Performance Chemicals Business is a key part of Future Sasol,
consistent with the strategy to increase focus on specialty
chemicals where Sasol enjoys differentiated capabilities and strong
market positions. Sasol will also retain access to competitively
priced onsite ethylene to ensure value chain integration.
The transaction is subject to customary regulatory approvals and
approval by Sasol shareholders. The transaction is expected to
close by the end of 2020.
Advisors
Kirkland & Ellis LLP is serving as LyondellBasell's legal
counsel, while Gordon Dyal & Co.
and J.P. Morgan are serving as financial advisors. Latham
& Watkins LLP is serving as Sasol's legal counsel, while
Bank of America is serving as financial advisor.
Investor conference call
LyondellBasell will host a conference call on Friday,
October 2 at 9:00 a.m. EDT.
Participants on the call will include Chief Executive Officer
Bob Patel, Chief Financial Officer
Michael McMurray and Director of Investor Relations Dave
Kinney.
The toll-free dial-in number in the U.S. is +1 (800) 475-8402. A
complete listing of toll-free numbers by country is available
at www.LyondellBasell.com/teleconference for
international callers. The passcode for all numbers is 6934553.
The slides that accompany the call will be available
at: https://www.LyondellBasell.com/investorevents.
A replay of the call will be available from 11:00 a.m. EDT
Friday, October 2 until December 2 at 11:59 p.m.
EDT. The replay dial-in numbers are +1 (800) 333-0467 (U.S.)
and +1 (203) 369-3627 (toll). The passcode for each is 3652.
Sasol will host a conference call on 2
October 2020 at 14:00 (SA time) via webcast on the following
link: https://www.corpcam.com/Sasol02102020. Participants on the
call will include President and CEO Fleetwood Grobler and
Chief Financial Officer Paul
Victor.
The slides that accompany the call will be available
at https://www.Sasol.com/investorcentre
About LyondellBasell
LyondellBasell (NYSE: LYB) is one of the largest plastics,
chemicals and refining companies in the world. Driven by its
employees around the globe, LyondellBasell produces materials and
products that are key to advancing solutions to modern challenges
like enhancing food safety through lightweight and flexible
packaging, protecting the purity of water supplies through stronger
and more versatile pipes, improving the safety, comfort and fuel
efficiency of many of the cars and trucks on the road, and ensuring
the safe and effective functionality in electronics and appliances.
LyondellBasell sells products into more than 100 countries and is
the world's largest producer of polymer compounds and the largest
licensor of polyolefin technologies. In 2020, LyondellBasell was
named for the third consecutive year to Fortune magazine's list of
the "World's Most Admired Companies." More information about
LyondellBasell can be found at www.LyondellBasell.com.
About Sasol
Sasol is a global integrated chemicals and energy company
spanning 30 countries. Through our talented people, we use selected
technologies to safely and sustainably source, manufacture and
market chemical and energy products globally. More information
about Sasol can be found at www.Sasol.com.
Cautionary Note Regarding Forward-looking Statements
The statements in this communication relating to matters that
are not historical facts are forward-looking statements. These
forward-looking statements are based upon assumptions of management
which are believed to be reasonable at the time made and are
subject to significant risks and uncertainties. Actual results
could differ materially based on factors including, but not limited
to, the business cyclicality of the chemical, polymers and refining
industries; the availability, cost and price volatility of raw
materials and utilities, particularly the cost of oil, natural gas,
and associated natural gas liquids; our ability to complete
the transactions described and the timing of such transactions; the
successful operation of the complex described; the receipt of all
required governmental approvals; our ability to achieve
expected synergies; the completion of the acquisition of additional
joint venture interests in the future; the impacts of the COVID-19
pandemic in geographic regions or markets served us, or where our
operations are located, including the risk of prolonged recession;
competitive product and pricing pressures; labor conditions; our
ability to attract and retain key personnel; operating
interruptions (including leaks, explosions, fires, weather-related
incidents, mechanical failure, unscheduled downtime, supplier
disruptions, labor shortages, strikes, work stoppages or other
labor difficulties, transportation interruptions, spills and
releases and other environmental risks); the supply/demand balances
for our and our joint ventures' products, and the related effects
of industry production capacities and operating rates; our ability
to successfully execute projects and growth strategies; future
financial and operating results; legal and environmental
proceedings; tax rulings, consequences or proceedings;
technological developments, and our ability to develop new products
and process technologies; potential governmental regulatory
actions; political unrest and terrorist acts; risks and
uncertainties posed by international operations, including foreign
currency fluctuations; and our ability to comply with debt
covenants and service our debt. Additional factors that could cause
results to differ materially from those described in the
forward-looking statements can be found in the "Risk Factors"
sections of our Form 10-K for the year ended December 31, 2019, and our Form 10-Q for the
quarter ended March 31, 2020, which
can be found at www.LyondellBasell.com on the Investor Relations
page and on the Securities and Exchange Commission's website at
www.sec.gov.
Additionally, this communication includes forward-looking
statements relating to the proposed joint venture between
LyondellBasell and Sasol, including financial estimates and
statements as to the expected timing, completion and effects of the
proposed joint venture. These estimates and statements are subject
to risks and uncertainties, and actual results might differ
materially. Such estimates and statements include, but are not
limited to, statements about the benefits of the joint venture,
including future financial and operating results and other
statements that are not historical facts. Such statements are based
upon the current beliefs and expectations of the management of
LyondellBasell and Sasol and are subject to significant risks and
uncertainties outside of our control. Actual results could differ
materially based on factors including, but not limited to, the
occurrence of any event, change or other circumstances that could
give rise to the termination of the transaction agreements, the
risk that Sasol shareholders may not approve the transaction, the
risk that the necessary regulatory approvals may not be obtained or
may be obtained subject to conditions that are not anticipated,
failure to realize the benefits expected from the proposed joint
venture. Discussions of additional risks and uncertainties are
contained in LyondellBasell and Sasol's filings with the Securities
and Exchange Commission. Neither LyondellBasell nor Sasol is under
any obligation, and each expressly disclaim any obligation, to
update, alter, or otherwise revise any forward-looking statements,
whether written or oral, that may be made from time to time,
whether as a result of new information, future events, or
otherwise. Persons reading this communication are cautioned not to
place undue reliance on these forward-looking statements which
speak only as of the date hereof.
Sasol Media Relations:
In South
Africa:
Alex
Anderson
Senior Manager: Group External Communication
Direct telephone: +27 (0) 10-344-6509
Mobile: +27 (0) 71-600-9605
alex.anderson@sasol.com
In the U.S.:
Kim Cusimano
North America Corporate Affairs
Direct telephone: +1 (225) 776-0758
kim.cusimano@us.sasol.com
LyondellBasell Media Relations
Phone:
+1-713-309-7575
Email: mediarelations@lyb.com
