KENYA – East African Breweries Limited (EABL) has secured a US$ 114.3 million (Sh11.5 billion) loan from Kenyan financial institutions to pay off a similar-sized loan taken from its London-based parent Diageo, reports Business Daily.

The local loan is also intended to save the Nairobi Securities Exchange-listed firm an additional tax burden that applies when a subsidiary takes a loan from its parent company.

Indications are that, the restructure will enable EABL to pay close to the effective corporate tax rate of 30% going forward.

The Diageo loan, which was unsecured, was priced at an interest rate of two percent above the defunct Kenya Bankers’ Reference Rate (KBRR).

EABL took the loan in 2012 to fund the buyback of a 20% stake in its subsidiary Kenya Breweries Limited, which it had earlier sold to its partner-turned-rival SABMiller.

EABL is building a US$140 million factory in Kisumu that will produce its Senator Keg beer brand that targets low-income consumers and is set to be commissioned within the first quarter of this year.

EABL raised Sh11 billion in two tranches of unsecured bonds with investors in March 2015 providing the company with US$50 million at an annual interest rate of 12.95%, with this batch of securities set to mature in March 2020.

In April 2017, the brewer also received US$60 million as a second issue at an annual interest rate of 14.17% and a redemption date of March 2022.

Andrew Cowan Chief Executive Officer EABL said the firm aims to jumpstart growth in sales of bottled beer in Kenya, as its biggest market.

The brewer, which also operates in Tanzania and Uganda, is also relying on health-conscious consumers to move sales of bottled beer back into growth, Cowan said.

We will be getting new consumers into beer who want lower sugar, lower calorie drinks,” he said,

Meanwhile, following its double digit growth in net profits by 33% to US$96.2m during its first half year results in its current financial year, the firm’s shares trading at the bourse have hit a highest in the last five months.

The capital market warmed to this performance while the board proposal of a Sh2.50 per share interim dividend, the highest interim pay-out since a similar one was made in 2012.

On Thursday, the share closed trading at the Nairobi Securities Exchange at US$2.12 (sh 213) representing a 14.2% increase from its weighted average price of US$1.85 (Sh186.50) prior to release of results.