Posted on September 27, 2023
Grindrod Shipping Holdings Ltd. (NASDAQ: GRIN) (JSE: GSH) (“Grindrod Shipping” or “Company“), a global provider of maritime transportation services predominantly in the drybulk sector, announced the entry by Grindrod Shipping Pte. Ltd., a wholly owned subsidiary of Grindrod Shipping, as buyer, and Grindrod Shipping, as parent, into two sale and purchase agreements (the “Sale and Purchase Agreements”) to acquire the entire issued share capital of Taylor Maritime Management Limited and Tamar Ship Management Limited (the “Companies”) from, in the case of Taylor Maritime Management Limited, Taylor Maritime Group Limited and, in the case of Tamar Ship Management Limited, Taylor Maritime Group Limited and Temeraire Holding (MI) Limited (together, the “Sellers”) (collectively the “Acquisition”). Following the Acquisition, the Companies will become wholly owned subsidiaries of Grindrod Shipping. The Acquisition is subject to certain closing conditions and closing is expected to occur before mid-October 2023.
Under the terms of the transaction, Grindrod Shipping Pte. Ltd. and Island View Ship Management Pte. Ltd. have agreed to acquire all of the shares of the Companies for a total consideration of approximately US$11.75 million via (i) a completion cash amount of US$2.0 million (subject to usual working capital and indebtedness adjustments), (ii) an allotment and issuance of completion consideration shares of approximately up to US$1.95 million, (iii) an issuance of consideration shares at the first anniversary of the completion date of up to approximately US$3.9 million (subject to certain earn-out related conditions), and (iv) an issuance of consideration shares at the second anniversary of the completion date of up to approximately US$3.9 million (subject to certain earn-out related conditions). The aggregate maximum value of the consideration for the Acquisition will not exceed US$13.5 million. Grindrod Shipping intends to finance the transaction with a combination of cash on hand and allotment of new Grindrod Shipping ordinary shares over the two years from completion. The number of consideration shares issuable is calculated based on the volume weighted average price on both NASDAQ and the Johannesburg Stock Exchange, plus 7.5 percent premium over a three month period prior to the date of entry of the Sale and Purchase Agreements. At the discretion of the Board of Directors, in lieu of new share issuances, there is an option for any portion of the first year and second year consideration amounts to be paid in cash, at an increase of 1.10 times and 1.20 times, respectively.
The Sale and Purchase Agreements contain customary warranties and covenants of the parties and, in connection with the Acquisition, each Seller will be subject to limited non-compete and non-solicitation covenants with regard to Grindrod Shipping and its subsidiaries for two years from the completion date. The closing of the Acquisition, expected to occur before mid-October 2023 is subject to closing conditions, including, among other things, the repayment of debts owed by the Companies and their subsidiaries to the Sellers and by the Sellers to the Companies and their subsidiaries.
It is to be further noted that our Chief Executive Officer, Mr. Edward Buttery, has recused himself from all deliberations on this Acquisition, as the Companies have a Framework Management Agreement with Taylor Maritime Investments Ltd. (“TMI”) to act as their Commercial and Technical Manager for TMI’s fleet. In addition, one of our non-executive directors, Mr. Paul Over, has also recused himself from this Acquisition as he is a non-executive director of Taylor Maritime (HK) Ltd, which is a subsidiary of Taylor Maritime Group Limited.
Commenting on the Acquisition, Grindrod Shipping Chairman, Dr. Kurt Klemme, said, “We are very pleased with the acquisition of Tamar Ship Management Limited and Taylor Maritime Management Limited, whose current operations are aligned with our technical ship-management practice and our commercial strategy. This Acquisition will further increase our revenue streams in terms of ship-management income, unlock synergies in our commercial deployment of the dry bulk fleet and we will achieve savings on the technical side with a larger fleet. With the central management of a combined group fleet, we will certainly achieve better returns to our shareholders.”
About Grindrod Shipping
Grindrod Shipping predominantly owns and operates a diversified fleet of owned and long-term and short-term chartered-in drybulk vessels. The drybulk business, which operates under the brand “Island View Shipping” (“IVS”) includes a core fleet of handysize and supramax/ultramax drybulk carriers. The Company is based in Singapore, with offices in London, Durban, Tokyo and Rotterdam. Grindrod Shipping is listed on NASDAQ under the ticker “GRIN” and on the JSE under the ticker “GSH”.