Grindrond plans a R1.6bn BEE equity transaction

JSE listed logistics giant Grindrod is praparing to roll out a R1.6 billion black economic empowerment (BEE) deal.

Grindrod made known its intentions on Friday as part of a broader announcement that will see the group raise bout R4 billion for expansion and for rearrangement of its existing BEE formations.

Grindrod is to raise about R3 billion through a rights issue and will use this money for expanding its operations. “Following the Bookbuild Placement, it is the intention of the Board to issue Grindrod shares to the (BEE) Consortium in order to raise up to R1.6 billion, by way of a specific issue of shares for cash.”

The company added that it is currently in final stage negotiations with its BEE partners, Calulo Investments and Solethu Investments to acquire their interests in certain operating subsidiaries in exchange for cash and/or Grindrod shares.

The company said “There are attractive inherent growth prospects for these businesses and the acquisitions represent an opportunity for Grindrod to acquire 100% of the earnings at fair value. Becoming the 100% owner of these businesses will enable Grindrod to create greater alignment between the subsidiary companies and the Group, eliminate any conflicts of interests which might exist, enable more efficient management of the businesses, appropriately capitalise the businesses and leverage the Group’s balance sheet in raising debt facilities.”

A portion of the proposed Equity Capital Raising will fund the cash cost of the acquisition of Calulo’s and Solethu’s interests in certain of the underlying operating subsidiaries.”

In keeping with the spirit of transformation and to align the Group to the ownership elements of the recently released new BEE codes, the Board has resolved to conclude a material BEE transaction at listed Company level with a consortium of black strategic investors. This consortium includes Calulo and Solethu. “In order to ensure that Grindrod retains sufficient BEE credentials post the acquisition of the interests in the operating subsidiaries, Calulo and Solethu will reinvest a material portion of the proceeds received in the New BEE Transaction. This reinvestment will be augmented by further equity being invested by another black strategic investor and supported by third party debt funding and vendor facilitated funding.”

Grindrod said it is currently assessing the required level of vendor facilitated funding to be provided to the Consortium by way of a preference share investment. “A portion of the proposed Equity Capital Raising will be used to fund the financial assistance provided by Grindrod to the Consortium. Full details of the New BEE Transaction, including the final composition of the Consortium, will be communicated to Grindrod shareholders in advance of the General Meeting.”

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