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UPDATE 1-South Africa's Sasol to write off $900 mln from 2008 empowerment deal

deal@ (Gives detail, adds new transaction information)

JOHANNESBURG, Sept 20 (Reuters) - South Africa's Sasol will write off $900 million of debt used to bring in black investors in a 2008 deal that foundered after a fall in oil prices hit its shares, the petrochemicals maker said on Wednesday.

The 28 billion rand ($2.10 billion) deal - at the time the biggest so-called "black economic empowerment" transaction in South Africa, was part of corporate efforts redress the imbalances of apartheid, which ended in 1994.

More than two decades after the demise of white-minority rule, much of South Africa's wealth remains in white hands.

Sasol said it would buy back the outstanding 12 billion rand of shares from its black investors, effectively cancelling them and allowing the company to write off the shortfall.

Sasol said it expects there will be no distribution of Sasol shares to participants, given the closing Sasol ordinary share price of 389 rand on 4 September, below break-even levels to pay back debt.

For more than 250,000 Sasol Inzalo investors the share should have reached at least 462 rand by 2018 to break even. The stock, which closed at 398 rand on Tuesday, looks unlikely to reach that level.

Sasol's share price has seen dampened growth since the transaction due to oil prices which have fallen by more than 40 percent since 2008.

The scheme paid 7.6 billion rand in dividends, 5.1 billion rand of which was used to pay down debt and the rest as payouts to shareholders and employees in the scheme. That still left the scheme with around 12 billion rand in debt.

Sasol will unwind the Inzalo transaction in favour of a new 21 billion rand scheme that will run for a further 10 years until 2028, giving at least 25 percent black ownership of Sasols wholly owned subsidiary, Sasol South Africa.

The new transaction, Sasol Khanyisa, will only be funded by the company and will not depend on share price fluctuations.

"Sasol Khanyisas success is not dependent on Sasol Limiteds share price fluctuations. As no external funding will be used, there will be no cash outflows from Sasol," said joint president and chief executive officer Bongani Nqwababa in a statement.

($1 = 13.3085 rand) (Reporting by Tanisha Heiberg; editing by Ed Cropley and Jason Neely)