Company Updates - TMI

Grindrod has proposed a selective capital reduction, with the intention of cancelling the shares not held by TMI and delisting the company.

On Thursday (4 April), Grindrod Shipping Holdings (of which Taylor Maritime Investments owns 82.33% through its wholly-owned subsidiary Good Falkirk) announced a proposal to undertake a Selective Capital Reduction (SCR), whereby the minority shareholders would be paid US$14.25 per share with their shares subsequently being cancelled. This equates to an aggregate cash distribution of US$49,578,956.25, funded using existing cash and cash equivalents on Grindrod's balance sheet.

For the SCR to occur, it must pass a vote at an extraordinary general meeting in which only the impacted minority shareholders will be able to participate.

If the SCR does occur, Grindrod will cease to be a publicly listed company and instead become a wholly-owned subsidiary of TMI. This will create significant cost savings and allow the accounts of both companies to be consolidated.

I do not expect for them to dissolve Grindrod and transfer the assets and liabilities to TMI, as this would lose the benefits of Grindrod being a holding company rather than a trust - namely that it's able to hold operating businesses, for example, the technical and commercial fleet managers they acquired last year.

A missed opportunity

In the spirit of rubbing one's nose in one's mistakes, I want to highlight the significant opportunity I missed in relation to these events. During TMI's last earnings call (the recordings of which are not easily accessible), management stated that they were planning to take action to delist Grindrod and consolidate it with TMI.

Had I considered the implications of this information - that some kind of cash distribution would likely be made to Grindrod shareholders that exceeded the share price at that time - I could have purchased some shares for <US$10 and captured a >40% return in just a few months.

I had a real edge here and I let it pass me by.

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Jamie Larson