EABL adopts new identity, unveils new US$99m corporate bond to fund operations

KENYA – Regional alcohol manufacturer, East African Breweries Limited, has changed its name to East African Breweries PLC with effect from 1st October 2021.

The PLC tag designates a company that has offered shares of stock to the general public, who have limited liability.

”Pursuant to the issuance of certificate of change of name by the Register of Companies, the firm has changed its name from East African Breweries Limited to East African Breweries Plc,” it said in statement.  

The brewer has also announced the issuance of a Ksh. 11 billion (US$99m) corporate bond under the Domestic Medium Term Note (MTN) programme, to finance part of its maturing loans.

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The notes to be listed at the Nairobi Securities Exchange (NSE) have a tenure of five years with a fixed yield of 12.25 per cent per year to be paid semi-annually.

The offer was opened to investors on October 6 and is expected to close on October 21 and subsequently list the notes on the Nairobi Securities Exchange (NSE) on November 1, reports Citizen News.

Minimum bond amount that is available for purchase is Ksh. 100,000 (US$903) and thereafter in multiples of Ksh. 10,000 (US$90).

According to the subsidiary of global beer manufacturer Diageo, proceeds from the bond will be used to repay loans, to provide working capital for the business across East Africa and to refinance short term loans.

The new issue comes months after East African Breweries’ retirement of a Ksh.6 billion (US$54m) MTN on June 28 this year in an early redemption which was floated in 2017 and was set to mature in 2022.

The placing agents for the company’s MTN Program are Absa Kenya Plc with Absa Securities as sponsoring brokers and Image Registers as paying agents. Coulson Harney Advocates are the transactions legal advisors, indicates the Star News.

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COVID-19 highly impacts East African Breweries earnings

The raised financing will enable it to stay afloat despite taking a hit from the Covid-19 pandemic after government closed bars and later reduced working hours at the outlets, among other Covid-19 restrictions, cutting down its earnings for the year ended June 30.

The firm’s net earnings in the period under review stood at KsSh6.96 billion (US$62m) compared to Ksh7.02 billion (US$63m) a year earlier, a move that saw it freeze dividend pay-outs to preserve capital.

The maker of Tusker, Guinness beer brands, reported 15% growth in revenue to Ksh 86 billion (US$791m), driven by smart investment behind brands, channel focus and innovations, which led to overall volume sales growing by 13%.

The higher turnover was accompanied by cost escalation across production, distribution and other areas, making it narrowly miss a complete performance turnaround with its full year profit to June slipping by a single percentage point.

SA alcohol industry resumes paying monthly excise tax

Meanwhile in South Africa, the liquor industry has commenced payment of deferred excise tax.

Following the implementation of the fourth total ban on alcohol sales in June declared by the government, the South African Liquor Brandowners Association (Salba) requested that the South African Revenue Service (Sars) provide extended payment terms on the excise duties of about R2.5 billion (US$167m) due to Sars for the month of June.

Sars proposed a 90-day deferral for the payment of excise taxes on alcohol which become due in October, reports BizCommunity.

The association announced today that its members, which includes major alcohol manufacturers such as Distell, Heineken, Diageo, Pernod Ricard and DGB, have commenced honouring their excise tax obligation to Sars this month.

The alcohol industry is a valuable sector in South Africa that supports around 1 million jobs in the value chain, critical export sales and makes a significant contribution to GDP.

It contributes R72 billion (US$4.8m) to the government’s fiscus by way of taxation, VAT, and excise and in 2019, the alcohol sector contributed 3.4% (R173 billion (US$11.59m)) of South Africa’s nominal GDP.

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