KnysnaGrindrod forced to bail out R1.6bn BEE failure – Knysna https://showme.co.za/knysna Knysna, South Africa for all your local and tourism information; from accommodation to events, entertainment, attractions and news - ShowMe Knysna | T Feed Wed, 06 Mar 2024 08:20:00 +0000 hourly 1 https://showme.co.za/knysna/?p=57511 Grindrod forced to bail out R1.6bn BEE failure https://showme.co.za/knysna/news/business-news/grindrod-forced-to-bail-out-r1-6bn-bee-failure/ Tue, 11 Aug 2020 06:21:38 +0000 Grindrod has asked shareholders for approval to bail out its failed black economic empowerment (BEE) scheme by ‘buying back...]]> Grindrod has asked shareholders for approval to bail out its failed black economic empowerment (BEE) scheme by ‘buying back’ shares issued to a special purpose vehicle (SPV) in 2014.

Shareholders will vote on this early next month.

Though not quite a City Lodge-level of disaster, the logistics company has been faced with this large headache for some time and while IFRS accounting will make the problem simply go away, it’s not as if shareholders haven’t had to pay up.

Read: City Lodge’s disastrous BEE deal

The original plan in 2014 seemed elegant enough: BEE shareholdings at various operating companies would be replaced by a direct stake at the listed (holding) company level. How Grindrod would get there is another matter entirely.

It raised R4 billion in the capital by issuing new shares. A total of R560 million of this was spent buying out BEE stakes in its various subsidiaries from Calulo and Solethu. These same partners (Calulo and Solethu) together with Brimstone and two other parties (Safika and the Adopt-a-School Foundation) then subscribed for R1.6 billion in shares during the capital raise.

Funding

This gave BEE shareholders an 8.39% stake in the overall business. Funding for the SPV was provided by Grindrod through the issue of R400 million in vendor preference shares, as well as Absa through a further R450 million in senior preference shares.

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