Business

Grindrod inks R274m BEE deal

24 February 2009

Grindrod has concluded a R274-million broad based black economic empowerment transaction, the JSE-listed shipping and logistics business said on Monday.

The transaction resulted in the sale of 25% plus one share of its subsidiary, Grindrod (South Africa), to Calulo Petrochemicals (15%) and the Adopt-a-School Foundation (10%) by way of the issue of new equity for R274-million, according to a statement.

Calulo and the foundation would not be allowed to sell their stake in Grindrod for the next 10 years.

Grindrod SA included the majority of Grindrod's 100% owned South African based operations, as well as Grindrod Terminals, comprising the dry and liquid bulk product terminal operations located in or adjacent to the ports of Richards Bay, Durban and Cape Town.

Grindrod Intermodal and Grindrod Logistics were also part of Grindrod SA.

"Grindrod's intention in implementing a transaction was not only to comply with the codes of good practice on BEE, but to establish a sustainable social investment that will make a difference in the lives of disadvantaged South Africans," the statement read.

According to CEO Alan Olivier, Grindrod had a successful business relationship with Calulo. It had already partnered with them in its South African marine bunkering and coastal shipping operation.

"They know the industry and add significant commercial value to the deal," Olivier said.

The third party in the transaction, Adopt-a-School Foundation, fitted well with Grindrod's support of education initiatives, he said.

The transaction would make the foundation, which currently relied entirely on donations, more sustainable. This would be done through Grindrod SA directing its corporate social investment expenditure to Adopt-a-School from the start of the transaction.

The transaction would ultimately result in a capital profit to the foundation if it chose to sell its investment in Grindrod SA after the 10 period during which it could not sell its stake. It could use this money to extend the reach of its work.

Calulo was a black-owned company with an operational niche in the chemicals sector. Chairman Mkhuseli Faku said the deal brought Calulo closer to its goal of investing in all aspects of the bulk logistics value chain.

"Our relationship with Grindrod over the years has developed into one in which we became mutual partners of choice."

Faku said he was "particularly pleased" at the Adopt-a-School Foundation being a material party to the transaction.

Adopt-a-School Foundation is a section 21 company founded in 2002 by Cyril Ramaphosa and other concerned South Africans.

The foundations aims to improve education infrastructure, particularly in rural areas, in order to create equal access to learning opportunities for all children, especially the disadvantaged.

The foundation's director, Donne Nicol, was quoted in the statement as saying: "We are excited that this deal will, in the future, help us reach many more of the schools that apply to us every year for assistance."

Sapa