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Informative Notice – 20180614 Restatement of Grindrod Ltd opening price
Grindrod Ltd (South Africa): Restatement of opening price due to
unbundling of Grindrod Shipping Holdings – Informative Notice
(FTSE/JSE Africa Index Series)
14 June 2018
FTSE/JSE note the distribution in specie, ex 13th June 2018, by Grindrod Ltd (South Africa, constituent) in
order to effect an unbundling of Grindrod Shipping Holdings (due to list on 19 June 2018). On ex-date,
Grindrod shareholders received unlisted Grindrod Compulsory Convertible Notes which are expected to
convert to Grindrod Shipping Holdings ordinary shares on 19 June 2018.
The purpose of this informative notice is to provide some guidance on how FTSE/JSE treats estimated
opening prices following spin-offs.
Informative notices are not typically published for capital repayments or non-Top 40 unbundlings.
However, this type of corporate event takes place infrequently in the FTSE/JSE Index series. What makes
this corporate event unusual is that the unbundled portion of the shares were converted to unlisted
compulsory convertible notes on ex-date, but they were expected to convert to Grindrod Shipping
Holdings ordinary shares days later on the listing date, 19 June 2018.
In accordance with the spin-off valuation rule 4.14.5 as set out in the Corporate Actions and Events
Guide, if the spin-off company does not trade on ex-date and its estimated valuation is incorrect by 10%
or more as measured at the ex-date open using the parent’s drop in price, then the opening price will be
restated.
What is usually experienced with an unbundling event is that the ex-date of an unbundling coincides with
the listing date of the unbundled entity. The index treatment in this instance is provided in rule 4.14.1
and 4.14.2 of the Corporate Actions and Events Guide. The spin-off entity will be added to the same
indexes as the parent company, per the terms of the event, on the ex-date of the distribution for a period
of 2 days, after which it is assessed for index eligibility. If found to be eligible, it will remain in the indices
until the next quarterly review. However, if it is not eligible for index inclusion, it will be deleted at its
market price after T+2 notice. In this case, FTSE/JSE would typically publish a deletion ICA after close of
business on the listing date.
Since the actual market opening price will only be known once the market opens, a new divisor is
calculated intraday using that price. This new divisor will then be used and the real-time index levels
refreshed.
With specific reference to the Grindrod unbundling, the index treatment was as follows:
Tuesday 12 June 2018 (at market close):
Grindrod Ltd’s actual market closing price was R12.77. A capital repayment of R5.5569075 was applied to
the closing price of Grindrod Ltd, resulting in a closing price of R7.213093 in the index series.
Wednesday 13 June 2018 (from market open):
Grindrod Ltd’s actual market opening price was R9.20. This equated to a 27.55% difference in the
estimated opening price of Grindrod in the index series on 13 June 2018. Grindrod’s opening price in the
Index Series will be revised to R9.20 and the restated index divisors will be published for the below
indices:
Index code Index name
J110 FTSE/JSE Responsible Investment Top 30 Index
J113 FTSE/JSE Responsible Investment Index
J143 Shariah All Share
J202 Small Cap
J203 All Share
J303 Capped All Share
J330 Value
J403 Shareholder Weighted All Share
J203CF FTSE/JSE All Share Comprehensive Factor Index
J203QF FTSE/JSE All Share Quality Factor Index
J203MF FTSE/JSE All Share Momentum Factor Index
J203LF FTSE/JSE All Share Low Volatility Focused Factor Index
J203SF FTSE/JSE All Share Size Factor Index
J203VF FTSE/JSE All Share Value Factor Index
J203VOF FTSE/JSE All Share Volatility Factor Index
J263 FTSE/JSE RAFI All Share
J283 FTSE JSE RAFI All Share Capped Index
J703 FTSE/JSE All Share Minimum Variance Index
In the event that FTSE/JSE experiences corporate events of this nature in future, the above index
treatment will apply. In addition, FTSE/JSE will publish an intraday informative notice which will provide
the new opening price and affected indices. Once the new divisor is calculated, the affected data products
will be re-issued and a market notice will be sent out to subscribers with the updated divisor.
For further information please contact FTSE Russell Client Services at info@ftserussell.com or call:
Australia +1800 653 680
Hong Kong +852 2164 3333
Japan +81 3 4563 6346
London +44 (0) 20 7866 1810
New York +1866 551 0617
JSE Limited +27 11 520 7137
Alternatively please visit our website at www.ftserussell.com
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