Brimstone announced earlier that it, together with other BEE partners, had entered into a binding agreement with Grindrod Limited to conclude an aggregate R1.6bn equity investment in Grindrod.
The transaction will result in the Consortium special purpose vehicle – comprising Brimstone, Calulo Investments and Solethu Investments – owning a shareholding of between 8% and 8.5% in Grindrod.
Subject to the approval of its ordinary shareholders, the Grindrod board has approved an equity capital raising through the issuance of up to R4bn of ordinary shares, of which up to R3 billion net cash proceeds will be utilised by Grindrod to fund capital projects and facilitate additional transactions.
The equity capital raising will be implemented through a combination of an accelerated bookbuild offering and a specific issue of shares to the Consortium SPV. Following the bookbuild placement, Grindrod intends to implement the consortium placement by issuing R1.6 billion worth of its shares for cash to the Consortium SPV at the bookbuild price.
The cash consideration of between R450m and R495m payable by Brimstone for its interest of between 59.2% and 65.1% in the Consortium SPV will be funded from its long-term funding facilities and the shares will be held by Brimstone or its nominee.
Executive Chairman of Brimstone, Fred Robertson said, “Brimstone has a proven track record of creating value for shareholders, establishing long-term relationships and leading consortia. Our partnership approach to investments has made us a BEE partner of choice and we look forward to expanding this model to Grindrod. This hallmark transaction signals our entrée into the infrastructure sector.”
Brimstone’s CEO, Mustaq Brey said, “This BEE transaction is in line with Brimstone’s strategy of investing in quality assets which create long-term value for our shareholders. In addition, it allows Brimstone to establish infrastructure as a new area of focus (alongside healthcare, food and financial services) which we have been investigating for some time.”
Brimstone’s investment in the BEE Transaction will help to partially fund Grindrod’s capital projects which will enable it to grow and diversify its earnings base.
Grindrod shares are currently tightly held. The BEE Transaction which is facilitated by Grindrod enables Brimstone to acquire a meaningful stake in the company on a leveraged basis.
The conclusion of the BEE Transaction is subject to the fulfilment a number of conditions precedent on or before 30 June 2014.