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GNDE - GND/GNDP - Grindrod - Acquisition of Fuelogic (Proprietary) Limited (Fuelogic)

29/04/2010 13:54:02

GND/GNDP - Grindrod - Acquisition of Fuelogic (Proprietary) Limited ("Fuelogic")
Grindrod Limited
(Incorporated in the Republic of South Africa)
(Registration number 1966/009846/06)
Share code: GND & GNDP
ISIN: ZAE000072328 & ZAE 000071106
("Grindrod " or "the Company")
1. Introduction
Grindrod (South Africa) (Pty) Limited ("GSA"), an indirectly held 75% less
one share subsidiary of the Company, has acquired 100% of the issued share
capital of Fuelogic from Arrowbulk Carriers (Pty) Ltd ("Arrow"), Ukhamba
Holdings (Pty) Limited, Calulo Petrochemicals (Pty) Limited ("Calulo") and
Graham Searle with effect from 21 April 2010. The shareholders of Arrow
comprise The Neil Rutenberg Family Trust, The Salad Trust and Imperial
Holdings Limited.
2. Description of the business
Fuelogic is a bulk liquid fuel transporter operating in Southern Africa
under long-term contracts from customers. Its operations include:-
- primary distribution of fuel from refineries and import facilities to
terminals, depots and large customers;
- secondary distribution of fuel from terminals and depots to customers;
- transportation of liquid petroleum gas.
3. Rationale for the transaction
Although the demand for fuel has softened on the back of suppressed
economic conditions, the long-term forecast for fuel demand remains robust
with significant growth opportunities available in the cross border market.
Accordingly, the Company had made a strategic decision to expand its
existing service offering in the petrochemical sector and, to this end, the
transaction will result in:
- increased critical mass and the associated benefits of economies of
- reduced earnings volatility and increased diversification of the
existing transport operation which has a large weighting towards the
automotive and dry bulk market segments; and
- providing a platform for the expansion of the operations into the
Southern African Development Community region.
4. Purchase consideration
The purchase consideration of R160 million will be discharged in full in
5. Pro forma financial effects
The effect of the acquisition on net assets, net tangible assets,
historical earnings and headline earnings per the Company share is less
than 3%.
6. Conditions precedent
All conditions precedent to the transaction, including the approval of the
Competition Commission, have been met.
7. Subsidiary
Fuelogic will, as a result of this transaction, be deemed to be a
subsidiary of Grindrod and its articles of association will therefore be
amended to conform to Schedule 10 of the Listings Requirements of the JSE
8. Related party
Calulo has an 18,98% shareholding in Fuelogic and a 15% shareholding in
GSA. Calulo is involved in the transaction in the capacities of both seller
and purchaser and effectively a net seller of 3,98% of its share capital in
9. Fairness opinion
The transaction is considered by independent expert, Deloitte & Touche
Corporate Finance, to be fair to the Company's shareholders. The fairness
opinion will be available for inspection at the registered office of the
Company for 28 days from today.
By order of the board.
29 April 2010
Grindrod Bank Limited
Date: 29/04/2010 13:54:01 Produced by the JSE SENS Department.
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