2005-11-19,+Sasol+considered+selling+Natref+to+aid+merger,+Crotty

= Sasol considered selling off Natref to aid merger =


 * Business Report, Johannesburg, October 18, 2005**


 * By Ann Crotty**

Johannesburg - Sasol and Engen had considered selling the Natref refinery in an effort to deal with possible competition-related concerns arising from the proposed merger between Sasol's liquid fuels business and Engen to create Uhambo.

In yesterday's proceedings at the competition tribunal, David Wright of corporate planning at Engen said that during the merger discussions the parties to the transaction had considered selling off the 64 percent stake in Natref held by Sasol and which would be injected into Uhambo as part of the transaction.

The other 36 percent of Natref is owned by Total, which recently declined to exercise its option to increase it to 50 percent.

In terms of the transaction that is being considered by the tribunal, Uhambo will control about 48 percent of the country's refining capacity and 34 percent of the retail petrol sales. Natref will account for a large proportion of this refining capacity.

During its investigation into the merger, the competition commission had considered forcing Uhambo to dispose of Natref as a condition for approving the transaction.

However, the commission believed that the parties to the deal would have walked away from it if this disposal condition had been imposed on them.

In a day that proved to be quite damning for the merging parties, as legal counsel for the opposing oil companies effectively challenged many of the arguments and figures put forward to support the transaction, Wright also told the hearing that Engen had been concerned that if it did not enter into the deal Sasol might restrict product supply to its outlets.

Wright told the tribunal that the creation of Uhambo, which would have a 62.5 percent local shareholder base, was an attractive proposition for all stakeholders. It had the potential to be the national champion in the domestic fuels industry.

Wright also raised the likelihood of the merger leading to a reduction in petrol prices following the deregulation of the industry.

Wright was emphatic that it would be impractical and unprofitable for Uhambo to refuse to supply the other oil companies with product. Foreclosure would require Uhambo to either cut back production at Natref or to withhold supply of product.

From: http://www.busrep.co.za/index.php?fSectionId=552&fSetId=260&fArticleId=2950696