NIGERIA – International Breweries Plc, the Nigerian unit of global brewer, Anheuser-Busch InBev is planning to raise N165bn (US$457.7m) in a share sale in order to reduce the mounting debt and reverse losses.
This follows the approval of the brewers’s ‘Rights Issue’ by its shareholders in mid-October.
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.
According to the company, current shareholders of the company may get share offers in November if the company gets clearance from Nigerian regulators.
At the end of October, International Breweries Plc reported dismal result for the nine months to the end of September.
The brewing company posted a staggering N16.4bn (US$45.3m) in net loss for the periods of January through September ending, which is a 130% increase from last year when it incurred a net loss of N7.1bn (US$19.6m).
The firm recorded N9.6bn (US$26.5) of its losses in the third quarter, i.e. a 124% increase from the previous year.
This is despite posting a 17% increase in sales in the nine months to N97.2bn (US$268.6m). The growth, however, slowed down in the third quarter with a 5.5% decline in sales, reports Beverage Industry News-NG.
IB Plc blamed the losses on rising costs, new excise duty on alcohol and stiff competition.
Administrative expenses shot-up by 60% in the nine months to N19.5bn (US$53.8m) from N12.2bn (US$33.7m).
Stiff competition between beer rivals, Nigerian Breweries Plc and Guinness Nigeria Plc is also having an impact on overall sales.
In addition to that the widening losses are linked to its growth momentum as the company expands capacity to meet customer demands.
The brewer, 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.
A 46% rise in finance cost to N13.1bn (US$36.2m) also added to the company’s woes, with the costs accelerating in the third quarter by N6.1bn (US$16.8m).
“Financing cost pressures will continue as we work towards closing out the rights issue by year-end,” the company said.