Johannesburg - Listed integrated logistics service supplier Grindrod anticipates having to consider a further rights issue within the next 18 months to help fund the expansion of its ports, terminals and rail business on the African continent.
Grindrod chief executive Alan Olivier said yesterday that if its expansion in Africa was in a joint venture, it would have to put up its share of the joint venture equity, but if it involved assets being built, it would be project funded via direct debt into that structure.
However, Olivier said that ultimately if Grindrod ran out of space on its balance sheet, it would “clearly have to look to shareholders again to add balance sheet capacity”.
Olivier admitted this could involve “possibly a rights issue or something like that” in about 18 months if its African growth projects happened.
Grindrod raised R2 billion in November 2011 when Remgro increased its shareholding in the group to 19.3 percent via a specific issue of new ordinary shares for cash and a share subscription offer to qualifying shareholders.
This capital injection aimed at assisting Grindrod to accelerate its then more than R10bn capital expenditure pipeline over the next five years and transform the group into a fully integrated freight and logistics service provider.
Olivier said yesterday that the group was a long way down the line in adding to the capacity of its big projects, such as the Matola coal terminal in Mozambique, the expansion of its dry bulk terminal at Richards Bay and a bulk liquid storage facility at Coega, but there were other projects.
He said Grindrod had also bought into the NLPI Zambian-Zimbabwean rail concession, which signalled the group’s movement into rail, but there were expansion opportunities “all up the Mozambican coast”.
Olivier said the group was already operating on the Beira railway and would look to operate on the Ncala railway line in Mozambique when it opened.
It would look at port and terminal opportunities in those areas and there were infrastructure opportunities in Zambia and Zimbabwe and in west Africa, specifically in Ghana and Sierra Leone, he said.
“There is a pipeline of projects and we have a project team that is run off their feet looking at projects… There are a lot of others competing for the same things but not a lot with our operating experience in Africa, which I think positions us better,” he said.
Olivier was adamant these opportunities would materialise but stressed “the wheel turns slowly in Africa” and he could not give a timeline.
Exceptional profit growth and expanded operational capacity in freight services, ports, terminals and rail enabled Grindrod to report yesterday a solid financial performance for the six months to June.
Headline earnings a share increased by 29 percent to 76.2c.
Revenue fell by 25 percent to R14.7bn but this was not comparable with the previous corresponding period because of the sale in March last year of 50 percent of Cockett Marine Oil to Vitol.
Operating profit before interest and taxation declined by 9 percent to R317m.
An interim dividend of 20c a share was declared, 14 percent higher than in the previous corresponding period.
Grindrod said it was well positioned for growth and to take advantage of an improvement in the global economy.
Grindrod shares rose 4.04 percent to close at R24.23. - Business Report