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GNDE - GRINDROD LIMITED - Proposed equity capital raising posting of circular and notice of general meeting

28/03/2014 12:57:00

GND 201403280034A
Proposed equity capital raising, posting of circular and notice of general meeting

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” or “the Group”)

PROPOSED EQUITY CAPITAL RAISING, POSTING OF CIRCULAR AND NOTICE OF GENERAL MEETING

1. Introduction

In its financial results for the year ended 31 December 2013, Grindrod announced its intention to undertake an
equity capital raising of R3.0 billion for planned capital expenditure.

Grindrod shareholders are advised that the board of directors of Grindrod (the “Board”) has approved an equity
capital raising process that will lead to the total issue of Grindrod shares of up to R4.0 billion, with net cash
proceeds to Grindrod of up to R3.0 billion (the “Equity Capital Raising”).

The proposed Equity Capital Raising is intended to fund capital projects and to facilitate certain additional
transactions as set out below.

1.1. Capital projects

Grindrod's stated strategy has been to diversify its portfolio of businesses, with primary focus on the
development of its strategically positioned port, terminal and rail capacity.The Company has a significant pipeline
of expansionary capital projects, with a forecast capital expenditure program totalling approximately R10.0 billion
over the next three years. The execution of these capital projects will require additional equity capital and
substantial debt funding.

The proposed Equity Capital Raising will provide the equity for the planned expansion of terminal capacity, port
and rail infrastructure and locomotives, as well as further investments within the agriculture sector.

1.2. Acquisition of Black Economic Empowerment (“BEE”) interests in subsidiaries

Grindrod is currently in final stage negotiations with its BEE partners, Calulo Investments Proprietary Limited
(“Calulo”) and Solethu Investments Proprietary Limited (“Solethu”), to acquire their interests in certain operating
subsidiaries of Grindrod in exchange for cash and/or Grindrod shares.

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.

1.3. New BEE transaction

Grindrod remains committed to driving transformation in ways that are sustainable, credible and of benefit to all
its stakeholders. 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 (“New BEE Transaction”) with a consortium of black strategic investors including, inter alia,
Calulo and Solethu (the “Consortium”).
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 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.

2. Equity capital raising

The Equity Capital Raising is intended to be implemented through a combination of an accelerated bookbuild
offering to qualifying investors (“Bookbuild Placement”) and a specific issue of shares to the Consortium
(“Consortium Placement”).

While the respective sizes of the Bookbuild Placement and the Consortium Placement have not yet been
finalised, the proposed Equity Capital Raising will not, in aggregate, exceed R4.0 billion. After making provision
for the acquisition of the interests in certain of the operating subsidiaries and the vendor facilitation to the New
BEE Transaction, the net cash proceeds to Grindrod will not be more than R3.0 billion.

2.1. Bookbuild Placement

Market conditions permitting, it is the intention of the Board to offer shares to qualifying investors by way of an
accelerated bookbuild offering. Investors will submit their price and volume orders into a book of demand and a
single clearing price will be established (“Bookbuild Price”).

Subject to the requisite approval of Grindrod shareholders, Remgro Limited (“Remgro”), through Industrial
Partnership Investments Proprietary Limited, has undertaken to submit an order of R800 million into the book of
demand.

Subject to the requisite approval of Grindrod shareholders, Grindrod Investment Proprietary Limited (“Grindrod
Investments”) has undertaken to submit an order of R250 million into the book of demand.

The Remgro and Grindrod Investments orders in the book of demand will be at the Bookbuild Price.

The Bookbuild Placement will be allocated at the discretion of the bookrunner, in consultation with the Company.
Allocations, if any, to Remgro and Grindrod Investments are not guaranteed and their orders will be scaled back
in the event that the Bookbuild Placement is over-subscribed.

2.2. Consortium Placement

Following the Bookbuild Placement, it is the intention of the Board to issue Grindrod shares to the Consortium in
order to raise up to R1.6 billion, by way of a specific issue of shares for cash.

The Grindrod shares will be issued to the Consortium at the Bookbuild Price.

3. Pro forma financial effects

The pro forma financial effects set out below have been prepared to assist Grindrod shareholders in assessing
the impact of the Bookbuild Placement and Consortium Placement on the earnings per share (“EPS”), headline
earnings per share (“HEPS”), net asset value (“NAV”) per share and tangible NAV per share of Grindrod based
on the audited financial statements of Grindrod for the twelve months ended 31 December 2013.
These pro forma financial effects are the responsibility of the Board and are provided for illustrative purposes
only. Due to the nature of these pro forma financial effects, they may not fairly present the Company's financial
position, results of its operations, changes in equity or cash flows after the Bookbuild Placement and Consortium
Placement.
Published and Adjustments Adjustments Pro forma after Total %
Audited for the for the the Bookbuild change
Bookbuild Consortium Placement and
Placement Placement Consortium
Placement
EPS (cents)
- Basic 199.1 (27.0) (7.9) 164.2 (17.5)
- Diluted 198.3 (26.8) (7.8) 163.7 (17.4)
HEPS (cents)
- Basic 118.7 (16.1) (2.7) 99.9 (15.8)
- Diluted 118.2 (16.0) (2.6) 99.6 (15.7)
NAV per Share (cents) 2 050.9 85.9 40.6 2 177.4 6.2
Tangible NAV per Share (cents) 1 939.4 101.0 47.8 2 088.2 7.7
Number of Shares in issue
(‘000) 591 586 92 593 55 556 739 735 25.0
Weighted average number of
Shares in issue (‘000) 591 109 92 593 55 556 739 258 25.1
Weighted average diluted
number of Shares in issue (‘000) 593 665 92 593 55 556 741 814 25.0

Notes and assumptions:
(1) The statement of financial position and statement of comprehensive income of Grindrod were extracted from its audited financial
statements for the 12 months ended 31 December 2013.
(2) The pro forma statement of comprehensive income was prepared on the assumption that the Bookbuild Placement and
Consortium Placement were implemented on 1 January 2013.
(3) The pro forma statement of financial position was prepared on the assumption that the Bookbuild Placement and Consortium
Placement were implemented on 31 December 2013.
(4) The effects of the Bookbuild Placement are based on the assumption that R2.5 billion (before estimated transaction costs of R13
million) was raised by way of the Bookbuild Placement at an assumed Bookbuild Price of R27.00, resulting in the issue of 92 592
593 Grindrod shares.
(5) The effects of the Consortium Placement are based on the assumption that R1.5 billion (before estimated transaction costs of
R13 million) was raised by way of the Consortium Placement at an assumed Bookbuild Price of R27.00, resulting in the issue of
55 555 556 Grindrod shares.
(6) The effects of the Consortium Placement are based on the assumption that financial assistance, by way of a preference share
investment of R400 million, was provided to the Consortium by Grindrod at an effective rate of prime plus 0.25% and that the total
shares of the Consortium were held as security over the funding, with the final redemption date being six years after the
subscription date.
(7) No adjustments have been made for interest earned on the proceeds of Bookbuild Placement or Consortium Placement, as per
the "Guide on pro forma financial information" issued by the South African Institute of Chartered Accountants.
(8) Once-off transaction costs of R26 million (exclusive of VAT) were assumed and debited to share premium.
(9) All adjustments above have a continuing effect except where otherwise stated.
(10) There are no other post balance sheet events requiring adjustments to the pro forma financial information.
(11) No adjustments have been made for the proposed acquisition of minority interests in Grindrod subsidiaries (refer to paragraph
1.2.), as final terms have not yet been agreed.
(12) No adjustments have been made for the minority interest earnings of the Grindrod subsidiaries that are proposed to be acquired
(refer to paragraph 1.2.), which would serve to reduce the dilutionary effect on earnings, as illustrated above.
Revised pro forma financial effects will be published on SENS following the completion of the Bookbuild
Placement and Consortium Placement.

4. Claw-back offer

Conditional upon the completion of the Bookbuild Placement, Remgro and Grindrod Investments have
undertaken to offer Grindrod minority shareholders the non-renounceable right to purchase Grindrod Shares
from them at the Bookbuild Price (the “Claw-Back Offer”).

Grindrod minority shareholders will be entitled to purchase from Remgro and Grindrod Investments a portion of
the Grindrod shares issued to Remgro and Grindrod Investments in the Bookbuild Placement, in proportion to
their shareholding of Grindrod shares on the record date for the Claw-Back Offer.

Full details of the Claw-Back Offer, including the final terms, maximum value offered and salient dates and times,
will be communicated to Grindrod shareholders following the Bookbuild Placement.

5. Shareholder approvals

Shareholder approval is sought to authorise:
- a specific issue of shares for cash pursuant to the Bookbuild Placement;
- the participation of related parties in the Bookbuild Placement; and
- a specific issue of shares for cash pursuant to the Consortium Placement.

6. Notice of General Meeting and posting of circular

A general meeting of Grindrod Shareholders will be held at the Company's registered office, Quadrant House,
115 Margaret Mncadi Avenue, Durban at 10:00 on Wednesday, 30 April 2014 (“General Meeting”) in order to
consider and, if deemed fit, pass with or without modification the resolutions set out in the notice of General
Meeting.

A circular, incorporating the notice of General Meeting, will be posted to Grindrod shareholders today, 28 March
2014.

7. Salient dates and times

2014

Last day to trade in Grindrod Shares in order to be recorded in the Register in order to
Wednesday, 16 April
participate in and vote at the General Meeting on

Record date to be entitled to participate in and vote at the General Meeting on Friday, 25 April

Last day to submit forms of proxy in respect of the General Meeting to the Transfer
Friday, 25 April
Secretary by 10:00 on
General Meeting to be held at the Company's registered office, Quadrant House, 115
Wednesday, 30 April
Margaret Mncadi Avenue, Durban at 10:00 on

Results of the General Meeting to be published on SENS on Wednesday, 30 April

Results of the General Meeting to be published in the press on Friday, 2 May


Notes:
1. The abovementioned times are South African times.
2. The abovementioned dates and times are subject to change. Any such change will be released on SENS and published in the South
African press.
3. Any form of proxy not returned to the Transfer Secretary by the stipulated time may be handed to the chairperson of the General
Meeting any time before the appointed proxy exercises any of the shareholder rights at the General Meeting.



Merchant bank, bookrunner and transaction sponsor
RAND MERCHANT BANK (a division of FirstRand Bank Limited)

Sponsor
Grindrod Bank

Independent reporting accountants
Deloitte

Legal adviser
ENS


28 March 2014

Date: 28/03/2014 12:57:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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