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GRINDROD LIMITED - Acquisition of existing sub-leases from SA Corporate Real Estate Limited

Release Date: 12/06/2020 17:30
Code(s): GND GNDP     PDF:  
 
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Acquisition of existing sub-leases from SA Corporate Real Estate Limited

Grindrod Limited
(Incorporated in the Republic of South Africa)
(Registration number 1966/009846/06)
Share code: GND & GNDP
ISIN: ZAE000072328 & ZAE000071106
(“Grindrod” or “the Company”)

ACQUISITION OF EXISTING SUB-LEASES FROM SA CORPORATE REAL ESTATE LIMITED

1.   INTRODUCTION

     Shareholders are advised that Grindrod Property Holdings Limited (“Grindrod Property”), a wholly-
     owned subsidiary of Grindrod, has entered into an agreement with SA Corporate Real Estate Limited (“SA
     Corporate” or the “Seller”) to acquire various letting enterprises comprising head leases (the “Head-
     Leases”) and underlying sub-leases (“Sub-Leases”) (collectively the “Leases”) held over five properties
     (the “Properties”) based within the Port of Durban (collectively the “Acquisition”).

     Grindrod (South Africa) Proprietary Limited (“Grindrod South Africa”), a wholly-owned subsidiary of
     Grindrod, currently leases the Properties from subsidiaries of SA Corporate (the “Sub-Leases”). The
     Acquisition will result in Grindrod Property becoming the lessee in respect of the Head Leases and the
     lessor in terms of the Sub-Leases.

     The effective date of the Acquisition will be the date on which the cession of the Head-Leases are
     registered into the name of Grindrod Property at the Pietermaritzburg Deeds Office, which is anticipated
     to be by the end of September 2020.

2.   RATIONALE FOR THE ACQUISITION

     The Sub-Leases are part of existing operations of Grindrod South Africa and therefore integral to the
     business.

3.   DETAILS OF THE SUB-LEASES

     The expiry dates of the Head Leases are between 1 December 2029 and 1 April 2054 and a description of
     the leasehold areas is as follows:

     3.1   Leases 32, 33, 34 and 35 of Lot 10014;
     3.2   Leases 29, 30 and 15 of Lot 10014;
     3.3   Leases 36 and 37 of Lot 10014;
     3.4   Leases 56 of Lot 10014; and
     3.5   Sub 1, 2, Rem of Sub 3, 4, 5, 6 Block M of Lot 10014.


4.   DETAILS OF THE ACQUISITION

     4.1     Purchase consideration

             Grindrod Property will acquire the Sub-Leases via a notarial deed of cession of the Head Leases for
             a consideration of R212 million, exclusive of VAT (the “Purchase Consideration”). The Purchase
             Consideration will be settled through debt funding against registration of transfer of the Head
             Leases into the name of Grindrod Property.

    4.2      Conditions precedent

             The Acquisition is subject to the following conditions precedent:

             4.2.1   Competition Commission approval; and

             4.2.2   consent by the Seller’s lenders to the cancellation of the existing mortgage bonds over the
                     Properties.

    4.3      Value of the net assets of the Acquisition and profits attributable to the Leases

             The value of the net assets that are the subject of the Acquisition is R220.8 million as at 31
             December 2019. The annual net property income attributable to the Acquisition is R20.48 million.
             This information has been extracted from SA Corporate’s audited annual financial statements for
             the year ended 31 December 2019, which have been prepared in terms of International Financial
             Reporting Standards.

             The Acquisition will result in increased debt facilities of R212 million for Grindrod and will also
             increase its total assets by R212 million. The Acquisition will have no impact on the net asset value
             of Grindrod.

   5. CATEGORISATION OF THE ACQUISITION

      The Acquisition is classified as a Category 2 transaction in terms of JSE Limited Listings Requirements
      and accordingly, no shareholder approval is required.


Durban
12 June 2020

Corporate advisor and Sponsor
Nedbank Corporate and Investment Banking

Date: 12-06-2020 05:30:00
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