The board of freight and logistics service provider Grindrod has approved an equity capital raising process that will lead to the total issue of Grindrod shares of up to R4-billion, with net cash proceeds to Grindrod of R3-billion to fund capital projects and to facilitate “additional transactions”.

The JSE-listed company had a significant pipeline of expansionary capital projects, with a forecast capital expenditure programme totalling some R10-billion over the next three years, requiring additional equity capital and “substantial” debt funding. 

The proposed capital raising would provide the equity for the planned expansion of terminal capacity, port and rail infrastructure and locomotives, as well as further investments in the agriculture sector. 

Meanwhile, Grindrod was also currently in final-stage negotiations with its black economic-empowerment (BEE) partners Calulo Investments and Solethu Investments to acquire their interests in certain operating subsidiaries of Grindrod in exchange for cash or Grindrod shares.

“A portion of the proposed capital will fund the cash cost of the acquisition of Calulo and Solethu’s interests in certain underlying operating subsidiaries,” the group said in a statement on Friday.

The board had also resolved to conclude a material BEE transaction at listed company level with a consortium of black strategic investors, including Calulo and Solethu, to ensure that it retained sufficient BEE credentials.

After the acquisition of the interests in the operating subsidiaries, Calulo and Solethu would reinvest a material portion of the proceeds received in the new BEE transaction.

This reinvestment would be augmented by further equity being invested by another black strategic investor and supported by third-party debt funding and vendor-facilitated funding. 

Grindrod was currently assessing the required level of vendor-facilitated funding to be provided to the consortium by way of a preference share investment.

“Again, a portion of the proposed equity capital raising will be used to fund the financial assistance provided by Grindrod to the consortium,” the company noted.

The equity capital raising was intended to be implemented through an accelerated bookbuild offering to qualifying investors and a specific issue of shares to the consortium.