GNDE - GRINDROD LIMITED - Proposed Disposal and Separate Listing of The Grindrod Shipping Business on The Nasdaq and JSE

23/03/2018 17:01:00

GND GNDP 201803230057A
Proposed Disposal and Separate Listing of The Grindrod Shipping Business on The Nasdaq and JSE

Grindrod Limited
(Incorporated in the Republic of South Africa)
(Registration number 1966/009846/06)
Ordinary share code: GND and ISIN: ZAE000072328
Preference share code: GNDP and ISIN: ZAE 000071106
(“Grindrod” or “the Company”)


1. Introduction and background

The ordinary shareholders of Grindrod (“Ordinary Shareholders”) and preference shareholders of Grindrod
(“Preference Shareholders”) (collectively, the “Shareholders”) are referred to the Stock Exchange News
Service announcements released on 23 August 2017 and 16 January 2018, wherein they were advised of
the intention of the Grindrod board of directors (“Grindrod Board”) to explore the separate listing of
Grindrod's shipping business on an international stock exchange, with a secondary inward listing on the
Johannesburg Stock Exchange (“JSE”) (“Proposed Transaction”).

The Grindrod Board is pleased to announce that it has resolved to proceed with the Proposed Transaction
and has entered into agreements to dispose of the Company's shipping business (“Grindrod Shipping
Business”) held via wholly-owned subsidiaries, Grindrod Shipping Pte. Ltd. (“GSPL”) and Grindrod Shipping
(South Africa) Proprietary Limited (“GSSA”) to an independent, newly incorporated Singapore registered
company, Grindrod Shipping Holdings Ltd. (“GRIN”). Subject to the conditions precedent in paragraph 4
below, it is estimated that the Proposed Transaction will be implemented on or about 18 June 2018 (“Closing
Date”). GRIN is the holding company which will acquire the Grindrod Shipping Business which comprises
the international drybulk and tanker shipping group of Grindrod, whose origins date back to the formation
of a shipping and related business in 1910 by Captain John Edward Grindrod.

Pursuant to the Proposed Transaction:

• GRIN will become the new holding company of GSPL and GSSA which will conduct the Grindrod
Shipping Business;
• GRIN has applied to list the GRIN Ordinary Shares on the NASDAQ Global Select Market
(“NASDAQ”), with a secondary inward listing on the JSE;
• Ordinary Shareholders will hold both Grindrod ordinary shares (“Ordinary Shares”) and listed GRIN
ordinary shares (“GRIN Ordinary Shares”); and
• Grindrod will have no further interest in or obligations to GRIN and the GRIN board of directors will
take full responsibility for the Grindrod Shipping Business from the date of completion of the
Proposed Transaction.

2. Rationale

The Grindrod Board is of the view that the Proposed Transaction will:

• allow shareholders to identify more clearly the different characteristics of the Freight Services and
Financial Services businesses and the Grindrod Shipping Business (through GRIN) and to value
them separately;
• allow management of each business to focus solely on that business and pursue their respective
• provide employees of each business stock-based incentives linked solely to his or her employer;
• enable each company to elect an appropriately sized board of directors comprised of individuals
with the skills and sector knowledge relevant to each business.

3. Details of the Proposed Transaction

3.1. Implementation mechanics of the Proposed Transaction

The transaction steps necessary in order to give effect to the Proposed Transaction will be
implemented on an inter-conditional and indivisible basis on the Closing Date, as follows:

On the Closing Date, the following actions will occur. Firstly, Grindrod will dispose of all of its
shares in GSPL and GSSA to the newly established GRIN, incorporated in Singapore. GRIN will
settle the purchase consideration of USD320 683 000 through the issue of non-interest bearing
GRIN compulsorily convertible notes (“GRIN CCNs”) of equivalent value to Grindrod.

Secondly, and immediately following the disposal of GSPL and GSSA to GRIN, the Grindrod
Board will effect a distribution in specie of the GRIN CCNs to Ordinary Shareholders on a pro rata
basis and in the ratio of 2.5 GRIN CCNs for every 100 Ordinary Shares held (i.e. each Ordinary
Shareholder will receive 1 GRIN CCN for every 40 Ordinary Shares held (“Grindrod Distribution”).

On application of the exchange ratio, fractional entitlements to GRIN CCNs will arise. The
fractional entitlements will be rounded down to the nearest whole number resulting in allocations
of whole CCNs and a cash payment for the fraction.

Thirdly and upon the receipt of the GRIN CCNs by the Ordinary Shareholders, the GRIN CCNs
will immediately and automatically convert into GRIN Ordinary Shares of equivalent value, in
accordance with their terms and in the ratio of 1 GRIN Ordinary Share for every 1 GRIN CCN held
(“Conversion”). The GRIN CCNs will be cancelled pursuant to the Conversion and the GRIN
Ordinary Shares will be listed on NASDAQ and the JSE.

The Conversion will be conditional upon the completion of the Grindrod Distribution. Refer to
paragraph 7 for further details relating to the rights of the Preference Shareholders.

All the Ordinary Shareholders will initially receive their GRIN Ordinary Shares on the branch
register in Republic of South Africa on the JSE. The non-South African Ordinary Shareholders
will then be able to transfer their GRIN Ordinary Shares to the branch register in the United States
of America (“U.S.”).

3.2. Listings on NASDAQ and the JSE

GRIN has applied to list the GRIN Ordinary Shares on NASDAQ under the symbol “GRIN”.

Subject to the requisite NASDAQ approval being obtained and the U.S. registration statement
being declared effective by the U.S. Securities and Exchange Commission, the GRIN Ordinary
Shares will list and trade on NASDAQ.

Subject to the requisite JSE and Shareholder approvals being obtained, GRIN will have a
secondary inward listing on the main board of the JSE. GRIN is currently engaging with the JSE
to finalise the regulatory requirements.

4. Conditions precedent to the Proposed Transaction

The Proposed Transaction is subject to the fulfilment or waiver, where capable of waiver, of the following
conditions precedent, by no later than15 June 2018:
• the relevant agreements becoming unconditional in accordance with their terms;
• the approval by the Shareholders of the ordinary resolutions necessary in order to give effect
to the Proposed Transaction;
• the receipt of the requisite regulatory approvals; and
• the primary and secondary listing of the GRIN Ordinary Shares.

The date for the fulfilment of the conditions precedent to the agreements may be extended until such later
date as may be agreed in writing between Grindrod, GSSA, GSPL and GRIN.

5. Net assets and profits of GSPL and GSSA

GSSA has sold its divisions Ocean Africa Container Lines (“OACL”) and Unicorn Bunker Services
Proprietary Limited (“Unicorn Bunker Barges”) to Grindrod South Africa Proprietary Limited, a subsidiary of
Grindrod, with an effective date of 1 January 2018.

The combined audited value of the net assets, in accordance with the conceptual framework and the
measurement and recognition requirements of International Financial Reporting Standards (“IFRS”), of
GSPL and GSSA (excluding OACL and Unicorn Bunker Barges) as at 31 December 2017 amounts
to USD317 688 000. The reported audited loss after tax in accordance with the conceptual framework and
the measurement and recognition requirements of IFRS for the year ended 31 December 2017 attributable
to GSPL and GSSA (excluding OACL and Unicorn Bunker Barges) is USD62 385 000.

6. Taxation considerations

The tax implications of the Proposed Transaction on an Ordinary Shareholder will depend on the individual
circumstances and relevant tax residency of each Ordinary Shareholder. Accordingly, Ordinary
Shareholders are advised to obtain independent tax advice in relation to the tax implications of the
Proposed Transaction.

The indicative tax consequences for Ordinary Shareholders will be annexed to the documents provided to
Ordinary Shareholders as a general guidance.

7. Preference share terms

In terms of their rights, each preference share in Grindrod (“Preference Share”) confers upon the relevant
Preference Shareholder the right to receive out of the profits of Grindrod which it determines to distribute,
the preference dividends, in priority to any payment of dividends or other distributions to the Ordinary

The Preference Shareholders will not be entitled to participate in the Proposed Transaction. The Preference
Shares are expressly non-participating and, provided that the preference dividends in respect of all
completed preference dividend periods (the period between 30 June and 31 December) have been paid,
are not entitled to participate in the Grindrod Distribution.

The Preference Shareholders received the preference dividend on or about 19 March 2018 in respect of
the last completed preference dividend period, the completion date of which was 31 December 2017.
Accordingly, no dividend rights will exist in respect of the Preference Shares until the next preference
dividend period is completed (which will be on 30 June 2018, which is after the Closing Date).

However, in accordance with the Preference Share terms, the Preference Shareholders will have voting
rights on the Proposed Transaction in proportion to the nominal value of their Preference Shares, as against
the aggregate nominal value of both the Ordinary Shares and Preference Shares, which currently equates
to the Preference Shareholders in aggregate being entitled to exercise 13.2351% of the total voting rights
in Grindrod. It is, however, further provided that the total votes exercisable by Preference Shareholders at
a general meeting shall not exceed 25% less one vote, of the votes exercisable by all Shareholders present
or represented by proxy at such general meeting. If the aggregate votes exercisable by Preference
Shareholders would otherwise exceed that limit, each Preference Shareholder shall be entitled to the
aforesaid proportional voting rights in respect of one-quarter only of his Preference Shares and, in respect
of the other three-quarters, such lower proportion as will result in the total voting rights exercisable by all
Preference Shareholders at such general meeting not exceeding such limit.

8. Shareholder support

The following Ordinary Shareholders, collectively holding 314 092 869 Ordinary Shares, representing
41.19% of the Company's issued ordinary share capital have provided written, support to vote in favour of
the Proposed Transaction:

Shareholder Number of Ordinary % of Ordinary Shares(1)
Remgro Limited 173 183 235 22.71%
Grindrod Investments Proprietary Limited 76 909 634 10.09%
Newshelf 1279 Proprietary Limited 64 000 000 8.39%
Total 314 092 869 41.19%

(1) Total number of Grindrod ordinary shares in issue: 762 562 490

9. Categorisation of the Proposed Transaction

The disposal of GSSA and GSPL to GRIN constitutes a Category 1 transaction in terms of the JSE Listings
Requirements and, as such, requires the approval of more than 50% of the votes of the Shareholders in a
general meeting. As all the transaction steps are inter-conditional and indivisible, if more than 50% of the
Shareholder votes are cast against the disposal of GSSA and GSPL to GRIN, the Proposed Transaction
will fail.

10. Documents to Shareholders

A circular containing full details of the Proposed Transaction, together with a notice convening a general
meeting of the Shareholders in order to consider and, if deemed fit, to pass the ordinary resolutions
necessary in order to give effect to the Proposed Transaction (“General Meeting”) will be posted to
Shareholders on or about 3 May 2018 (“Circular”).

For the purpose of the secondary inward listing on the JSE, it is the intention that the GRIN pre-listing
statement will be posted to the Ordinary Shareholders along with the Circular.

The filed GRIN Registration Statement on Form 20-F, will be distributed to the Ordinary Shareholders prior
to the General Meeting.

23 March 2018

Corporate sponsor and joint transaction sponsor
Grindrod Bank Limited

Financial advisor and lead independent transaction sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)

Date: 23/03/2018 05:01:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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