Grindrod South Africa (Pty) Ltd scoops the Alec Rogoff Broad-Based Black Economic Empowerment Award

Thursday, September 23, 2010

Grindrod South Africa (Pty) Ltd scoops the Alec Rogoff Broad-Based Black Economic Empowerment Award Grindrod South Africa (Pty) Ltd, a subsidiary of Grindrod Limited, the JSE listed shipping and logistics group, scooped the coveted award for the KZN BEE Deal / Project of the year. The annual Alec Rogoff Broad-Based Black Economic Empowerment Awards was held at the Durban Chamber of Commerce and Industry’s 154th Gala dinner on the 14 September 2010. More on the reasons and structure of this innovative approach to Black Economic Empowerment According to the Schools Needs Register, South Africa has about 28 000 schools of which 21000 have unsatisfactory infrastructural facilities. 50% of our schools have no electricity over 9 000 schools have no access to telecommunications, 30% have no water and 10% have no sanitation. Against this background in 2001, Adopt-a-school Foundation was established with the aim of assisting schools to find solutions to their challenges and partnering with sponsors to create sustainable learning institutions. When Grindrod Freight Services (Pty) Ltd ‘GFS’ , a wholly owned subsidiary of Grindrod Limited, the JSE listed shipping and logistics business, concluded a Broad Based Black Economic Empowerment (“BBBEE”) transaction, it did so in an innovative fashion. Instead of inking a corporate deal with the usual well known empowerment partners, GFS set its sights on a holistic BBEEE strategy and welcomed black ownership through the sale of 25% plus 1 share of its subsidiary, Grindrod South Africa (Pty) Ltd (“GSA”) to Calulo Petrochemicals (Pty) Ltd (15%) and the Adopt-a-School Foundation(10%). GSA includes the majority of Grindrod’s 100% owned South African based operations (Grindrod Terminals, Grindrod Intermodal and Grindrod Logistics). In selecting its partners, Grindrod balanced the need to incorporate strategic commercial partners into the business whilst at the same time facilitating and supporting the sustainability of worthy broad based enterprises. Grindrod’s intention in implementing a transaction was not only to comply with the Codes of Good Practice on BBBEE, but to establish a sustainable social investment that will make a difference in the lives of disadvantaged South Africans. Said Alan Olivier, CEO of Grindrod Limited, “We have a successful business relationship with Calulo and have already partnered with them in our South African marine bunkering and coastal shipping operation. They know the industry and add significant commercial value to the deal. The third party in this transaction, Adopt-a-School Foundation, fits very well with Grindrod’s social responsibility focus which has always been to support education initiatives”. This is the first such transaction to be concluded by the Adopt-a-School Foundation and will ultimately create sustainability for Adopt-a-School, whose current model relies entirely on donations from third parties. This sustainability will be enhanced through GSA directing its Corporate Social Investment expenditure to Adopt–a-School from the inception of the transaction. The transaction structure has largely been vendor financed by Grindrod, with the exception of an own equity contribution by Calulo. The Foundation will in future have a capital asset which will, beyond the lock-in period, allow the Foundation to either raise funding against its shares in GSA, realise a capital profit on the sale of its shares in GSA or maintain its investment in GSA and continue to extract dividends to fund its various initiatives.

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