Grindrod Shipping Holdings Stock

Grindrod Shipping Holdings Ltd. operates as an international shipping company that owns, charters-in and operates a fleet of drybulk carriers. The company operates as a subsidiary of Good Falkirk (MI) Limited.

The company operates in the drybulk carriers business, which is further divided into handysize, supramax/ultramax, and other operating segments.

In the drybulk business, the company is primarily focused on the handysize and supramax/ultramax segments. The company has 15 handysize drybulk carriers and 16 supramax/ultramax drybulk carriers in the company’s Fleet with sizes ranging from 28,240 dwt to 64,230 dwt. The company’s drybulk carriers transport a broad range of major and minor bulk and breakbulk commodities, including ores, coal, grains, forestry products, steel products and fertilizers, along worldwide shipping routes, and are currently employed either in the spot market or servicing COAs.

As of December 31, 2022, the company operated its Fleet of 31 vessels consisting of 24 owned drybulk carriers and seven long-term chartered-in drybulk carriers. As of December 31, 2022, the company’s Fleet on the water had a total drybulk carrying capacity of approximately 1.1 million dwt.

The company provides commercial management for its drybulk carriers. The company also technically manages the majority of the vessels that the company owns. In addition, the company operates a service in the drybulk sector where the company ships bulk cargo in parcel sizes that may be significantly less than the full carrying capacity of a vessel, or even less than the carrying capacity of an individual hold on a vessel. Where the company loads more than one parcel of bulk cargo in a hold the company will separate the parcels using steel plates and other dunnage materials. Wherever it makes commercial sense to do so, the company uses vessels from its Fleet to carry this type of cargo. The company also will source vessels off the spot market to carry the cargo.

Business Strategies

The key elements of the company’s strategy are to primarily focus on handysize and supramax/ultramax drybulk market; utilize a dynamic approach to fleet development; leverage the company’s commercial management expertise; and continue to grow the company’s relationships with key industry players.

Employment of the company’s Fleet

The company operates its vessels in the spot market, on long- and short-term time charters and on occasion on bareboat charters. In addition to employing the company’s vessels in these ways, the company uses FFAs and enters into COAs to manage its revenue risk and employment risk. Where the company carries cargo under COAs, the company may utilize its Fleet to do so or the company may utilize vessels that the company short-term charter-in that are not part of the company’s Fleet. The company employs its vessels primarily in the spot market.

Commercial Pools

The company’s IVS Handysize Pool includes all of the handysize vessels in the company’s Fleet, including those previously held through joint ventures, except for the three approximately 37,700 dwt handysize vessels which are commercially managed as a group by the same in-house team that manages the IVS Handysize Pool. In addition, there are numerous other vessels that the company has short-term chartered-in and one other vessel owned by another vessel owner in the IVS Handysize Pool that was redelivered on February 2, 2023. This pool includes vessels of between approximately 28,000 dwt and 34,000 dwt, and trades primarily in the spot market. As pool managers the company has the ability to contract pool vessels out on time charters for up to 12 months.

The company’s IVS Supramax Pool includes all of the supramax/ultramax vessels in the company’s Fleet, including those previously held through joint ventures. There are no vessels owned by independent third parties in this pool. This pool includes vessels of between approximately 57,800 dwt and 64,300 dwt and trades in a combination of COAs and the spot market. As pool managers, the company has the ability to contract pool vessels out on time charters for up to 12 months. The net earnings allocated to the vessels in the IVS Supramax Pool are distributed on the basis of the number of pool points for the vessel, which are based on vessel attributes, such as cargo carrying capacity, fuel consumption, and construction characteristics; and the number of days the vessel was available to earn revenue for the pool in a distribution period. While all of the vessels in the IVS Supramax Pool are generally similar in terms of pool point allocations, the number of days a vessel is available to earn revenue for the pool varies on the basis of when a vessel enters or exits the pool or upon the occurrence of other events, such as drydocking or repairs. In light of the foregoing, this results in all vessels in the IVS Supramax Pool receiving net earnings distributions that generally reflect actual availability for use in the pool.

Spot Market

The company’s three approximately 37,700 dwt handysize vessels are primarily employed in the spot market and the vessels in the IVS Handysize Pool, are also employed in the spot market. The vessels in the IVS Supramax Pool trade in a combination of COAs and the spot market.

Commercial Management

The company’s three approximately 37,700 dwt handysize vessels are commercially managed as a group by the same in-house team that manages the IVS Handysize Pool and operate primarily in the spot market.

The company owned two medium range tankers of approximately 50,000 dwt, which were commercially managed by Mansel (an affiliate of Vitol that procures shipping for oil cargoes traded by Vitol) and operated in the spot market and on Vitol traded cargoes until they were sold in April 2021.

The company commercially managed one approximately 16,900 dwt tanker, which primarily traded around the southern African coast, fulfilling obligations the company has under COAs, as well as the spot cargo market until it was sold in April 2021.

Bareboat Charter

The company’s remaining medium range tanker vessel was bareboat chartered out until May 2022. The vessel was subsequently sold on June 1, 2022.

Joint Ventures

IVS Bulk Pte. Ltd.

The company, through its wholly owned subsidiary, GSPL, owns interest in IVS Bulk Pte. Ltd., or IVS Bulk, a joint venture with Sankaty European Investments III S.à.r.l, or Sankaty, and Regiment Capital Ltd, or Regiment.

Leopard Tankers Pte. Ltd.

As of December 31, 2021, the company owned a 50% interest in Leopard Tankers Pte. Ltd., or Leopard Tankers, a former joint venture with Vitol, or the company’s joint venture partner. Leopard Tankers owned four 50,000 dwt tankers, which were commercially managed by Mansel, an affiliate of Vitol, which received a management fee. This joint venture terminated and the company acquired two medium range ‘eco’ tankers from the joint venture, namely Leopard Sun and Leopard Moon, in January and February 2019, respectively, and the company’s joint venture partner acquired the remaining two vessels from Leopard Tankers in February and March 2019. Leopard Tankers Pte. Ltd. and its subsidiaries were deregistered in 2022.

Customers

The company’s customers with whom the company contracts as commercial managers of the company’s own, its joint venture partners’ and third parties’ drybulk carriers include other shipping companies, international commodity trading houses, mining companies, industrial manufacturing companies, major oil companies, and traders of grains, steel and forestry products.

Environmental and Other Regulations

A variety of governmental, quasi-governmental and private organizations subject the company’s vessels to both scheduled and unscheduled inspections. These entities include the local port authorities (applicable national authorities, such as the United States Coast Guard, or USCG, harbor master or equivalent), classification societies, flag state administrations, charterers, and terminal operators.

All the company’s vessels are in substantial compliance with SOLAS (Safety of Life at Sea of 1974) and the International Convention on Load Lines of 1966 standards.

The company’s operations are also subject to environmental standards and requirements under Chapter IX of SOLAS set forth in the International Management Code for the Safe Operation of Ships and for Pollution Prevention (ISM Code). The company relies upon the safety management system that the company or its technical managers have developed for compliance with the ISM Code.

The company and/or its third-party technical manager have documents of compliance and safety management certificates for all of the company’s vessels for which the certificates are required by the International Maritime Organization, the international United Nations advisory body on transport by sea (IMO).

All of the company’s owned vessels are flagged in Singapore except one supramax and three handysize bulk carriers that are subject to financing arrangements, IVS Phoenix, IVS Knot, IVS Kinglet and IVS Magpie, which are flagged in the Marshall Islands. Singapore flagged vessels have historically received a good assessment in the shipping industry.

Each of the company’s vessels are ISM Code certified. The Comprehensive Environmental Response, Compensation and Liability Act also applies to the company’s operations.

The company complies in all material respects with the USCG’s (United States Coast Guard’s) financial responsibility regulations by providing a certificate of responsibility evidencing sufficient self-insurance.

The company is in substantial compliance with the Maritime Labor Convention 2006.

The company or its third-party technical managers, as applicable, implement the various security measures addressed by the U.S. Maritime Transportation Security Act of 2002, SOLAS, and the International Ship and Port Facility Security Code; and the company’s Fleet complies in all material respects with applicable security requirements.

All the company’s vessels are certified as being ‘in class’ by the American Bureau of Shipping, or ABS, Det Norske Veritas, or DNV, Class NK, or NK, and Lloyd’s Register, or LR.

History

The company was founded in 1910. It was incorporated in 2017 in accordance with the laws of the Republic of Singapore. The company was formerly known as Grindrod Shipping Holdings Pte. Ltd. and changed its name to Grindrod Shipping Holdings Ltd. in 2018.