NIGERIA – The shareholders of International Breweries Plc have approved the company’s ‘Rights Issue’ as proposed by the Board of Directors and further authorised the board to take all steps required to give effect to the resolutions as approved.
In a statement released to the Nigerian Stock Exchange (NSE), it read, “International Breweries Plc hereby notifies The Nigerian Stock Exchange that the Shareholders of the Company at the General Meeting held on 15 October, 2019 approved the Rights Issue as proposed by the Board of Directors and authorized the Board to take all steps required to give effect to the Resolutions as approved.
“Following this approval, the Board of Directors discussed the forthcoming Rights Issue and the proposed terms thereof and approved a Rights Issue price of N9.00 per share,” the statement further read.
The company said that further details on the Rights Issue will be provided in due course.
In September the Nigerian subsidiary of Anheuser-Busch InBev notified the Nigerian Stock Exchange (NSE) of its intention to seek a “Rights Issue” as a form of capital raising for the company.
The move came as International Breweries saw its debt grow as it mounts a challenge to break the dominance of the Nigerian beer market by Heineken controlled Nigerian Breweries Plc and Guinness Nigeria Plc, a subsidiary of Diageo Plc.
It completed the construction of a new brewery in Sagamu, Ogun State in 2018 at an initial cost of US$250m, with the company indicating that the final cost reached about US$400m.
Despite experiencing strong revenue growth with the expansion of its capacity, the growth came at a cost.
The company recorded a net loss of N4bn (US$11m) in 2018 and the losses have continued into the first half of 2019, recording N6.8bn (US$18.86m) in net loss.
According to a recent report by Nairametrics, a web-based financial resource and literacy company, “for every N100 in sales, the breweries spends N69 as direct cost. And out of the balance of N31, it spends another N15 on marketing and promotion, as well as N20 on operating expenses, leaving it with an operational loss.
Coupled with a humongous N225 billion loans (US$ 642m), the company does not generate enough revenues to pay for it.