Grindrod still mulls over foreign shipping listing

Freight, shipping and financial services group Grindrod has delayed determining where a separate listing of its shipping business on a recognised international stock exchange will take place.

It says domestic and international regulatory requirements for a proposed international listing had prevented a final decision being taken before the end of 2017.

The group said the “various processes required with the different regulators in the relevant jurisdictions are taking longer than initially expected”.

Work was continuing and “based on current timing estimates the Grindrod board aims to make its final determination … in the early part of 2018”, said the group. In September 2017, when it announced its results for the half-year to June, Mike Hankinson, independent nonexecutive chairman of Grindrod, acting as executive chairman after former CEO Alan Olivier retired in July 2017, said that the listing process had made good progress and would be complete in the first half of 2018.

Grindrod’s 2017 interim results reflected better commodity markets. These had positively affected earnings before interest, tax, depreciation and amortisation (ebitda) of R640m, inclusive of joint ventures and excluding the company’s rail assembly businesses.

This compared with ebitda of R246m in the corresponding period in 2016, when the company had posted a net loss of more than R1bn amid dismal markets.

But the closure of the railassembly businesses held for sale had resulted in losses and impairments that contributed to a headline loss of R129m for the period. However, this was considerably better than the R381m headline loss previously.

Grindrod said at the time it had appointed advisers to work on unbundling its shipping business onto an international exchange that supported shipping groups — with an inward listing into SA.

Ron Klipin, a Cratos Capital portfolio manager, said on Tuesday that the delay concerned an offshore listing in either London or New York. Earlier reports had speculated that Singapore was the target stock exchange.

“This is the start of value unlock and is probably the end of the company in its present format. Next on the agenda, a sale of logistics [businesses], which include ports, rail, road and ancillary services. Possible buyers of [these businesses] could be Bidvest, Imperial or Super Group,” he said.

In June 2017, JSE-listed construction giant Wilson Bayly Holmes-Ovcon and Faku Family Enterprises bought Grindrod Rail Construction and Grindrod Rail Construction SA for a firesale price of R62.3m.

These entities have now been rebranded iKusasa Rail, a 75% black-owned company which “is aligned with government’s transformation strategy”.

THIS IS THE START OF VALUE UNLOCK AND PROBABLY THE END OF THE COMPANY IN ITS PRESENT FORMAT