Griffin buy-out will give Grincor greater flexibility

WITH THE withdrawal of Griffin Shipping Holdings from its Johannesburg Stock Exchange (JSE) listing, the Grincor (Grindrod/ Unicorn) Group would achieve much more control of this subsidiary, according to Grincor m.d. Mike Groves.
This follows the announcement that Grincor wishes to acquire the remaining, public-held shares in Griffin (40%), terminate its JSE listing, and make it a wholly-owned subsidiary. In terms of the scheme, Griffin shareholders will receive one Grincor N ordinary share, plus 60 cents for every Griffin ordinary share held.
The logic behind the move, according to Groves, is to place all the Grincor/Griffin fleet of ships under one manager - with the freedom to interchange and buy and sell vessels as required. You can't play around with Griffin when you have minority interests to take into account, he said.
Under the proposed scheme, the current public shareholders also stand to benefit, Groves added.
The grouping of Griffin and Grincor shipping activities into a single operational structure will broaden the shipping markets to which Griffin shareholders are exposed, he said. With Grincor earning 85% of its operating profits from shipping activities, Griffin shareholders will retain significant exposure to the shipping market, and will benefit from any future upturn. This whilst retaining the rand hedge element of the investment in a lower cost operation.
This procedure is a continuation of the group's recent management re-engineering programme - where Groves pointed to a streamlined structure, with the removal of one complete layer of management.
The decision is inline with the group's focus on areas of operational activity, he said, rather than its corporate structure. This has resulted in the disposal of non-core operations, and that more streamlined management structure.
The Griffin buy-out is also no more than a formalisation of the status quo. Under c.e. Alan Olivier, Grincor's new shipowning division already incorporates the Griffin fleet along with Unicorn Tankers and the line's coastal freighters in its fleet management portfolio.
This process will be enhanced by Griffin becoming a wholly-owned subsidiary.
It will allow rationalisation and synergistic benefits to be maximised for Griffin and Grincor shareholders, said Groves. The redeployment of Griffin assets for the benefit of the business will, in turn, enhance the returns for Grincor shareholders.