Grindrod to sell $260 mln stake to Remgro
Grindrod , Africa's top shipping company, will sell $260 million of new shares to investment firm Remgro to help fund its ambitious expansion, Reuters reports.
Durban-based Grindrod, in the midst of a five-year, $1.3 billion expansion, also said on Tuesday it will take on more debt to meet its capital spending plans, such as the expansion of the Maputo coal terminal in Mozambique.
"Grindrod is comfortable with having its gearing round about 75 percent, particularly as we roll out these projects," Chief Executive Alan Olivier told analysts on a conference call.
Analysts have said Grindrod needs to fast-track expansion of the Maputo terminal to help offset declining profit at its mainstay shipping business.
Grindrod, which transports raw materials from resource-rich Africa to the rest of the world, has been under pressure as the global economic slowdown dampened commodity demand and as an oversupply of cargo ships hit freight rates.
The weak shipping market and hefty investment meant Grindrod will be unlikely to increase profit for the next three to four years, said Kenneth Hearn, an analyst at Absa Capital.
"Grindrod is building a serious capital spending programme: your operating leverage is going to increase, your financial leverage is going to increase."
To help fund expansion, Grindrod said it will issue 133.3 million new shares to Remgro for 15 rand each, a deal worth 2 billion rand ($260 million). That will give the investment firm as much as a 22 percent stake in the shipping company.
Remgro will offer the shares, under the same terms, to existing Grindrod shareholders. That could limit the amount of the stake it ultimately acquires, Remgro and Grindrod said in a joint statement.
The price represents a premium of 8.8 percent to Grindrod's 30-day VWAP, or volume weighted average price, the companies said.
The Grindrod family, the company's biggest shareholder with a stake of some 18 percent, will not subscribe to additional shares, Grindrod said.
Shares in the company jumped 4.3 percent to 15.58 rand, making them one of the top percentage gainers on Johannesburg's All-share index .
Deutsche Bank AG (DBKGn.DE) is acting as the lead financial adviser to Grindrod on the capital raising, while RMB, a unit of FirstRand , is advising Remgro.
Durban-based Grindrod, in the midst of a five-year, $1.3 billion expansion, also said on Tuesday it will take on more debt to meet its capital spending plans, such as the expansion of the Maputo coal terminal in Mozambique.
"Grindrod is comfortable with having its gearing round about 75 percent, particularly as we roll out these projects," Chief Executive Alan Olivier told analysts on a conference call.
Analysts have said Grindrod needs to fast-track expansion of the Maputo terminal to help offset declining profit at its mainstay shipping business.
Grindrod, which transports raw materials from resource-rich Africa to the rest of the world, has been under pressure as the global economic slowdown dampened commodity demand and as an oversupply of cargo ships hit freight rates.
The weak shipping market and hefty investment meant Grindrod will be unlikely to increase profit for the next three to four years, said Kenneth Hearn, an analyst at Absa Capital.
"Grindrod is building a serious capital spending programme: your operating leverage is going to increase, your financial leverage is going to increase."
To help fund expansion, Grindrod said it will issue 133.3 million new shares to Remgro for 15 rand each, a deal worth 2 billion rand ($260 million). That will give the investment firm as much as a 22 percent stake in the shipping company.
Remgro will offer the shares, under the same terms, to existing Grindrod shareholders. That could limit the amount of the stake it ultimately acquires, Remgro and Grindrod said in a joint statement.
The price represents a premium of 8.8 percent to Grindrod's 30-day VWAP, or volume weighted average price, the companies said.
The Grindrod family, the company's biggest shareholder with a stake of some 18 percent, will not subscribe to additional shares, Grindrod said.
Shares in the company jumped 4.3 percent to 15.58 rand, making them one of the top percentage gainers on Johannesburg's All-share index .
Deutsche Bank AG (DBKGn.DE) is acting as the lead financial adviser to Grindrod on the capital raising, while RMB, a unit of FirstRand , is advising Remgro.