Sasol Limited Class Action Lawsuit
- Company Name
- Sasol Limited
- Stock Symbol
- Class Period
- March 10, 2015 to January 13, 2020
- Southern District of New York
On February 5, 2020, the Sasol Limited securities class action lawsuit was filed charging Sasol and certain of its officers with violations of the Securities Exchange Act of 1934. The Sasol securities class action lawsuit was commenced in the Southern District of New York on behalf of purchasers of Sasol securities between March 10, 2015 and January 13, 2020 (the “Class Period”) and is captioned Moshell v. Sasol Limited, et al., No. 20-cv-01008.
Sasol, founded in 1950, operates as an integrated chemical and energy company in South Africa. On October 27, 2014, Sasol announced the construction of an $8.1 billion ethane cracker and derivatives complex in Lake Charles, Louisiana, dubbed the Lake Charles Chemicals Project (“LCCP”). The LCCP includes seven manufacturing units, some of which are in continued development, including the low-density polyethylene facility and Ziegler alcohol, ethoxylates and Guerbet alcohol facilities, among others.
The Sasol securities class action lawsuit alleges that throughout the Class Period, defendants made materially false and misleading statements and/or failed to disclose adverse information regarding Sasol’s business and operations. Specifically, defendants failed to disclose that: (i) Sasol had conducted insufficient due diligence into the LCCP and had failed to account for multiple issues, including the true cost of the project; (ii) construction and operation of the LCCP was consequently plagued by control weaknesses, delays, rising costs, and technical issues; (iii) these issues were exacerbated by Sasol’s top-level management, who engaged in improper and unethical behavior with respect to financial reporting for and oversite of the LCCP; and (iv) the foregoing was reasonably likely to render the LCCP significantly more expensive than disclosed and negatively impact Sasol’s financial results. As a result of this information being withheld from the market, the price of Sasol American Depositary Receipts (“ADRs”) was artificially inflated to more than $41 per share during the Class Period.
On June 6, 2016, Sasol reported “that the expected total capital expenditure for the [LCCP] could increase up to US$11 billion” and “[t]he expected returns for the project have [been] reduced due to changes in long-term price assumptions and the higher capital estimates.” Following these disclosures, the price of Sasol ADRs fell $3.53 per share, or 11%, to close at $28.60 per share on June 6, 2016.
On May 22, 2019, Sasol disclosed that “the cost estimate for the LCCP has been revised to a range of $12,6 to $12,9 billion which includes a contingency of $300 million,” citing a $530 million change in the project’s cost forecast, a “[c]orrection for certain contracts and variation orders managed by Sasol . . . of approximately $180 million,” and forecast improvements that were “not expected to be realised and adjustments for potential insurance claims and procurement back-charges of approximately $120 million.” Following these disclosures, the price of Sasol ADRs fell $4.50 per share, or nearly 15%, to close at $25.64 per share on May 22, 2019. On August 16, 2019, Sasol disclosed that it was delaying the announcement of its 2019 financial results because of “possible LCCP control weaknesses.” On this news, the price of Sasol ADRs fell 4% to close at $17.67 per share on August 16, 2019. Then on October 28, 2019, Sasol disclosed that its review of the LCCP control weaknesses had brought to light “errors, omissions, and inaccuracies in the [LCCP] cost estimate” and a number of unethical and improper reporting activities that had taken place at the highest level of management. Sasol also announced the resignation of several of its senior officers, including those who had been in charge of the LCCP. On this news, the price of Sasol ADRs fell another 10% over the next three trading days.
Finally, on January 14, 2020, Sasol confirmed that on January 13, 2020, it had “experienced an explosion and fire at its LCCP low-density polyethylene (LDPE) unit.” Sasol stated that “[t]he unit was in the final stages of commissioning and startup when the incident occurred” and had “been shut down and an investigation [was] underway to determine the cause of the incident, the extent of the damage and resulting impact on the LDPE unit’s [beneficial operation] schedule.” Following these disclosures, the price of Sasol ADRs fell $1.70 per share, or nearly 8%, over the following two trading days, to closed at $19.99 per share on January 15, 2020.
Robbins Geller Rudman & Dowd LLP is one of the world’s leading law firms representing investors in securities class action litigation. With 200 lawyers in 9 offices, Robbins Geller has obtained many of the largest securities class action recoveries in history. For seven consecutive years, ISS Securities Class Action Services has ranked the Firm in its annual SCAS Top 50 Report as one of the top law firms in the world in both amount recovered for shareholders and total number of class action settlements. Robbins Geller attorneys have helped shape the securities laws and have recovered tens of billions of dollars on behalf of aggrieved victims. Beyond securing financial recoveries for defrauded investors, Robbins Geller also specializes in implementing corporate governance reforms, helping to improve the financial markets for investors worldwide. Robbins Geller attorneys are consistently recognized by courts, professional organizations and the media as leading lawyers in the industry.