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GNDE - Grindrod invests close to R2 billion in fleet

15/02/2005 13:11:47

Grindrod invests close to R2 billion in fleet expansion
GRINDROD LIMITED
(Registration number: 1966/0009846/06)
Share code: GND
ISIN: ZAE000052247
In a major expansion of its fleet, Grindrod has bought a 605 TEU geared
container ship for $7 million, ordered four new 12 800 dwt oil/chemical tankers
for $72 million and taken delivery of a 32 000 dwt handysize bulk carrier in
which it has a 50% share at a cost of $10 million.
'This follows a $200 million order for seven newbuilding product tankers and
will see Grindrod with a substantial fleet of ships by the end of 2007' said
Ivan Clark, Grindrod Managing Director. 'These ships have been ordered /
purchased at competitive prices and with the strong Rand are good buys in Rand
terms, although some have been financed in US Dollars. These good buys will add
further to our stated policy of creating sustainability and growth of earnings
going into the future', he said.
In the most recent development Grindrod has bought the 605-TEU geared
containership, Range, which is currently on charter to Ocean Africa Container
Line (OACL), Grindrod's partnership with Safmarine for its Southern African
feeder service.
Having been employed on the trade for a number of years, the 133-meter vessel
will remain on charter to OACL for at least five years.
'This purchase represents a sound investment at a time when larger ships are
being deployed on the trans-ocean container trades, increasing the demand for
feeder vessels and consequently causing the rates for vessels of this size to
firm,'
Of the four new 12 800-dwt oil/chemical tankers, Grindrod expects the first,
Cederberg, to be delivered by Samho Shipbuilding Company in Korea during the
second half of 2006. Another three - Swartberg, Drakensberg and Langeberg -
will follow shortly thereafter.
Built to higher safety specifications than those required by international
agreements, these 127-metre tankers will have a scantling draught of 8,7 metres,
enabling them to call at smaller ports, giving Grindrod considerable versatility
in the charter markets.
This tanker building program is an extension of Grindrod's earlier initiative in
terms of which the seven 37 000-dwt double-skinned, product tankers were ordered
from the Shin-A yard in South Korea.
Of the seven 37 000-dwt tankers three are already operating on long-term
employment - Southern Unity is moving oil products along the Southern African
coast; Nyathi is trading mainly around the Mediterranean and is currently in the
Black Sea, while Oliphant, commissioned in December 2004, will trade worldwide
within the Dorado products tanker pool that is managed by Heidenreich Marine,
based in Darien, Connecticut, USA.
Oliphant entered service amidst a shipping climate that is favourable to owners
of double-skinned tankers as earnings and values for this class of vessel are
firm and the outlook for this market is encouraging.
With shipping markets having been exceptionally strong resulting in record high
ship prices, Grindrod took the opportunity to exercise a well-priced option to
sell one of the seven 37 000-dwt tankers under construction in Korea, which will
be delivered to her new owners in November this year.
'When Grindrod ordered the 37 000-dwt tankers, average daily earnings on the
spot market were around US$14 000 per day. The current daily rates are in the
region of US$25 000, and even time charter rates are now at similar levels,'
said Clark.
'Since placing our order for these tankers it has become mandatory on many
important trade routes to move cargo in double-skinned tankers, and over the
next few years, all single-skinned vessels will be phased out. This has surged
orders for these vessels to the extent that most shipyards capable of building
them have full order books well into 2008. It has also increased substantially
the value of Unicorn's tanker fleet,' he said.
Although the tanker market has been bullish for several months - pushed further
by the seasonal demand during the Northern hemisphere's winter - London
shipbroker Clarksons believe that the trend will continue well into 2008.
A shortage of refinery capacity in the USA against a growing demand for refined
products will not be fulfilled in the medium term as environmental lobbies have
succeeded in curtailing the expansion of North American refineries.
China, analysts believe, will continue to absorb huge volumes of imported energy
adding substantially to the tonne-mile demand.
The 32 000 dwt handysize bulk carrier The Durban Bulker will be used in the
worldwide IVS/Lauritzen handysize joint venture pool which is currently enjoying
high rates and in which Grindrod has a substantial number of low cost handysize
bulk carriers employed at much higher rates. In addition Grindrod recently took
delivery on long term charter of two newbuilding panamax vessels, the IVS
Pinotage and IVS Merlot. These ships were ordered and chartered in when
shipping markets were low and have been chartered out for 3 and 5 years
respectively at much higher rates with good counter parties. These are in
addition to a number of capesize vessels which have been chartered out at good
rates through to the end of 2006. Clark said, 'This is another material step
to meeting our stated objective of giving shareholders sustainable earnings
going into the future'.
He concluded, 'We now have delivered or on order or on long term charter a
modern fleet of ships at competitive prices on low charter in rates. A fair
number of these have been chartered out at good rates for medium to long periods
and we would hope to fix out more long term charters as additional ships
deliver.'
He added, 'Our substantial fleet expansion program is in addition to our stated
intention of spending at least R1 billion on growth in our landbased operations
and follows the announcement last week regarding the acquisition of controlling
interests in coal and bulk terminals at Maputo and Walvis Bay and several other
acquisitions in the landbased field'.
Clark said, 'We have good cash flows and plan to spend them well growing the
Grindrod group's operations which are focused on shipping and freight
logistics'.
Grindrod will be announcing its results for the year to December 2004 on
Thursday 24 February and has already put out a trading update which indicates
that these results will be between 130% and 140% up on 2003.
SHIP SPECIFICATION SUMMARIES
Range Cederberg, Swartberg,
Langeberg & Drakensberg
Type of Ship Geared Containership Oil/Chemical Tanker
Year Delivered 1983 Delivery due 2006 (Cederberg)
Builders J.J. Sletas KG Schiffswerft Samho Shipbuilding Company Ltd
GmbH & Co, Hamburg Tongyeong, Korea
Classification Germanischer Lloyd American Bureau of Shipping
DWT 11 754 12 800 (approximately)
Length overall 133.30m 127.20m
Moulded Breadth 20.20m 20.40m
Draught 8.65m 8.70m
Speed 16.5 knots 13.4 knots
Main Engine MaK diesel MAN-B&W diesel
Cargo Hatches/Tanks 3 Hatches 12 Tanks
Cargo Cranes 2 x 35t SWL/28m -
TEU Capacity 605 TEU -
Date: 15/02/2005 01:00:07 PM
Produced by the JSE SENS Department

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