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Investors cry foul over Sasol BEE fund

Image: Sunday Times

Investors who put their money in Sasol’s Inzalo shares are banding together over the R30billion black economic empowerment scheme they describe as an imitation vehicle with a BMW sticker.

The company‚ however‚ says it has refinanced the deal at no cost to the original investors with a new offering it hopes will bring hard cash to more than 200‚000 black shareholders.

Investors who bought into the scheme in 2008 to score a stake in one of South Africa’s most successful companies are now crying foul as their hopes have been dashed by market forces.

Frustrated investors have started a Facebook group called “Sasol Inzalo robbed us”.

‘People bought because it is a brand name – but it is definitely worthless’
 
Dale Chetty Sasol Investor 

These investors feel that the company has let them down and failed to achieve its BEE objective through the transaction.

“Existing shareholders of Sasol who owned the shares when we bought Inzalo shares in 2008‚ had already benefited from apartheid,” one member of the group, Dale Chetty‚ said.

“Why did [Sasol] create a separate BEE share that would benefit shareholders based on future investment‚ from 2008 onwards‚ when the actual money was created during the apartheid era?

“Basically they sold us a dummy product.

“It is like they sold us a fong kong car with a BMW sticker.

“People bought because it is a brand name. It is Sasol but the product is definitely worthless‚” Chetty said.

The group‚ comprising about 100 people‚ was considering taking legal action against Sasol as it believed investors had been left with shares that nobody wanted to buy.

“As a group, we believe that this was not done in a fair spirit of BEE ownership initiative.

“What Sasol did was take our R18 or R19 a share for the first hundred and R26 for all the shares above 100.

“Whoever bought more than 100 needed to pay R26 a share. They took that from all of us 10 years ago and they are not giving us any money back for that. They took our money and collected profits from that investment.

“It was basically an interestfree loan that they received.

“They receive money from the bank. We covered about less than one tenth of the actual share price. The bank covered the rest of it.

“So they got this interestfree loan for 10 years and BEE accreditation for 10 years‚ making it [as if] there are BEE people that own Sasol.

“But towards the end of the 10-year period‚ we don’t actually own any value of that company.”

According to Sasol‚ the Inzalo transaction was implemented by Sasol Ltd in 2008 as part of its B-BBEE plan.

The shareholders in the Inzalo companies paid a portion of the subscription price with the balance of the subscription price funded by banks.

Sasol provided guarantees for any shortfall in the repayment of the funding.

“However‚ the dividends were not enough to repay the funding‚ and after 10 years the outstanding amount due to the banks exceeds the value of the shares.”

Sasol said it anticipated that there would be no distribution to Sasol Inzalo public shareholders when the transaction terminates in September.

However‚ the company has implemented a new transaction called Sasol Khanyisa.

“Sasol has implemented the Sasol Khanyisa transaction in which only the Sasol Inzalo shareholders were invited to participate at no cost to them.

“All existing Sasol Inzalo shareholders who participated in the Sasol Khanyisa transaction have received bonus SOLBE1 shares (tradable from June 2018) and also free Sasol Khanyisa shares (tradable in June 2028)‚” the company said.

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