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GNDE - GND/GNDP - Grindrod Limited - Grindrod introduces Vitol as a strategic

18/01/2012 14:15:20

GND
GND
GND/GNDP - Grindrod Limited - Grindrod introduces Vitol as a strategic
partner in the Maputo Coal Terminal and forms a Coal Trading Joint Venture
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 group")
GRINDROD INTRODUCES VITOL AS A STRATEGIC PARTNER IN THE MAPUTO COAL TERMINAL
AND FORMS A COAL TRADING JOINT VENTURE.
1. Introduction
Grindrod is pleased to advise shareholders that it has entered into a
transaction with Vitol Anker International BV and Vitol Mauritius
Limitada ("Vitol") effective 1 January 2012, in terms of which:
* Grindrod will sell a 35% interest in the company which owns the
Maputo coal terminal concession to Vitol; and
* The parties will establish a coal trading company which will
acquire Vitol and Grindrod's South African coal trading books and
in which Grindrod will own 35%;
("the Transaction").
2. Salient features of the Transaction
2.1.1 Sale of a 35% interest in the company which owns the Maputo
coal terminal concession
In terms of the Transaction, Grindrod Mauritius Limitada
("GMU"), a subsidiary of Grindrod, will sell 35% of its shares
and loan claims in Terminal de Carvao da Matola ("TCM") to
Vitol for a consideration of US$67.7 million payable upon the
Transaction becoming unconditional.
2.1.2 Establishment of a coal trading joint venture
In terms of the Transaction, Grindrod and Vitol will form a
sub-Saharan African coal trading joint venture. Grindrod will
acquire its equity in this entity for a nominal consideration.
Grindrod will own 35% of the new company. Both parties will
contribute their South African coal trading books at their
market values based on a pre-determined formula and a cash
adjustment to reflect their proportionate shareholdings. For
this purpose, Grindrod's coal book has initially been valued
at US$6.9 million and Grindrod will contribute US$6.5 million
in cash.
The proceeds in 2.1.1. will be used to fund Grindrod's portion
of the planned future expansion of the Maputo coal terminal.
The effective date of the Transaction is 1 January 2012. In
addition to agreements giving effect to the Transaction,
Grindrod and Vitol have concluded shareholders' agreements,
the terms of which are considered standard for transactions of
this nature.
3. About Vitol
The Vitol Group was founded in 1966 in Rotterdam, the Netherlands. Since
then the company has grown significantly to become a major participant
in world energy markets and is now one of the world's largest
independent energy traders. Its trading portfolio includes crude oil,
oil products, bunker fuel, LPG, LNG, natural gas, coal, power, metals
and carbon emissions. Vitol trades with all the major national oil
companies, the integrated oil majors and the independent refiners and
traders. Through its trading business, Vitol has established itself in
shipping as one of the world's largest charterers of crude oil and oil
product tankers. Globally Vitol trades over 5.5 million barrels of
crude oil and products per day and its 2010 revenues were US$195
billion.
In addition to its trading business and its 50% share in the storage and
terminals business, VTTI, with 11 terminals on five continents, Vitol
has an exploration and production business which includes interests in
Ghana, Cameroon, Kazakhstan, Russia and Azerbaijan. It also currently
owns and operates over 100 000 barrels per day in refining assets and a
thermal coal mine in British Columbia, Canada.
Further details on the Vitol Group are available at www.vitol.com.
4. Rationale for the Transaction
Grindrod, through the introduction of Vitol, has established a
relationship with one of the world's largest trading businesses.
Vitol will assist Grindrod in developing the Maputo coal terminal
through their experience in operating world-class terminal facilities
and their global coal trading operations.
5. Conditions subsequent to the Transaction
The transaction requires Mozambique Government approval.
6. Pro forma financial effects
The unaudited pro forma financial effects have been compiled from the
unaudited consolidated financial statements of Grindrod for the six
months ended 30 June 2011. The unaudited pro forma financial effects,
for which the directors are responsible, are provided for illustrative
purposes only to show the effect of the Transaction on the earnings,
headline earnings, diluted earnings and diluted headline earnings per
share as if the Transaction had taken effect on 1 January 2011 and on
the net asset value and net tangible asset value per share as if the
Transaction had taken effect on 30 June 2011. Because of their nature,
the unaudited pro forma financial effects may not give a fair
presentation of Grindrod's financial position and performance. The
unaudited pro forma financial effects are presented in a manner
consistent with the format and accounting policies of Grindrod and have
been adjusted as described in the notes below.
Before the After the Notes Change
Transaction Transaction (%)
(Note 1)
(Note 2 and 3)
Basic earnings per 60.8 146.0 4,5,6 140%
share (cents)
Diluted earnings per
share (cents) 60.7 145.7 4,5,6 140%
Headline earnings
per share (cents) 55.7 64.8 4,5,6 16%
Diluted headline
earnings per share 55.5 64.6 4,5,6 16%
(cents)
Net asset value per 1 177.3 1 259.0 4,5,6 7%
share (cents)
Net tangible asset
value per share 1 173.5 1 258.6 4,5,6 7%
(cents)
Shares in issue 455 953 455 953
('000)
Weighted average
number of shares in 455 930 455 930
issue ('000)
Diluted weighted
average number of 457 055 457 055
shares in issue
('000)
Notes:
1. The "Before the Transaction" column reflects the unaudited
consolidated results of Grindrod for the six months ended 30 June
2011.
2. The "After the Transaction" column reflects what the results would
have been, had the Transaction been effective for the six month
period ended 30 June 2011 for the statement of comprehensive income
purposes and as at 30 June 2011 for the statement of financial
position purposes.
3. The interest income on the proceeds has been provided for using a
rate of 0.4% (libor) per annum (pre-tax).
4. The "After the transaction" column reflects the effects of the
disposal of 35% of Grindrod's interest in Terminal de Carvao da
Matola (TCM).
5. The carrying value of 35% of TCM's net assets at 30 June 2011
amounted to R17.0 million (US$2.5 million). The attributable
profit of TCM for the six months ended 30 June 2011 was R10.1
million (US$1.5 million). The Transaction will result in a profit
on disposal of R346.8 million (US$51.3 million). The profit on
disposal of Grindrod's 35% interest in TCM has been included in
statement of comprehensive income as Grindrod will no longer
control TCM. Grindrod, in conjunction with Vitol, will have joint
control of TCM.
6. The statement of comprehensive income for the six month period
ended 30 June 2011 and the statement of financial position as at 30
June 2011 have been adjusted for the profit on sale of the Grindrod
coal book of R46.7 million (US$6.9 million).
7. Accounting policies have been applied consistently to both the
'Before the transaction' and 'After the transaction' numbers.
8. The following prevailing exchange rates as at 30 June 2011 were
used:
Six month average exchange rate 6.91
Closing exchange rate 6.76
7. Categorisation of the Transaction and withdrawal of cautionary
announcement
In terms of the Listings Requirements, the Transaction is categorised as
a Category 2 transaction.
Shareholders are referred to the cautionary announcement published by
Grindrod on 12 January 2012 and are advised that having regard to the
above, caution is no longer required when dealing in the Company's
securities.
Durban
18 January 2012
Corporate advisor and sponsor:
Grindrod Bank Limited
Date: 18/01/2012 14:15:20 Produced by the JSE SENS Department.
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