Sept. 20 (Bloomberg) -- Grindrod Ltd., Africa’s largest shipping company, closed at its highest level in more than 5 months in Johannesburg after announcing a plan to sell 2 billion rand ($260 million) of new shares to Remgro Ltd.
The shares advanced 4.3 percent at 15.58 rand at the 5 p.m. close, its highest since April 7. Remgro fell 0.2 percent to 114.10 rand. The FTSE/JSE All Share Index climbed 1.2 percent.
Grindrod will use the money to strengthen its balance sheet and fund projects including the expansion of a coal terminal at Maputo in Mozambique, Chief Executive Officer Alan Olivier said in a conference call with investors today.
Remgro, a South African investment company, will pay 15 rand a share, giving it 22 percent in Durban-based Grindrod, according to a joint statement. Grindrod’s shareholders are eligible to buy stock on the same terms, lowering Remgro’s stake. Grindrod plans to spend 10 billion rand in five years to expand port and terminal capacity, particularly at Maputo.
Capacity at the terminal rose to an annual 6 million metric tons by February from 4 million tons. Grindrod is planning to start development work by mid-2012 to add additional capacity of more than 20 million tons at an expected cost of $600 million to $800 million, Olivier said.
“It is positive that Remgro is willing to pay a premium,” Kenneth Hearn, an analyst at Absa Capital, said in Johannesburg. “Remgro clearly sees this expansion project as a value investment.”
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