NIGERIA – Nigerian Breweries Plc, the largest brewing company in Nigeria, has unveiled plans to raise up to N600 billion (US$450M) through a rights issue aimed at addressing challenges posed by the Naira devaluation and high borrowing costs.
The Company Secretary of Nigerian Breweries, Uaboi Agbebaku, made this announcement in a notification sent to the Nigerian Exchange Ltd. (NGX) in Lagos.
Agbebaku revealed that the decision was reached at a specially convened meeting of the Board of Directors held on Tuesday.
The primary objective of the rights issue is to strengthen the company’s balance sheet and alleviate the debt burden highlighted by a net loss of N106 billion (US$450M) in 2023.
Agbebaku further explained that the proceeds from the rights issue would contribute significantly to reducing the debt burden, ultimately leading to a healthier balance sheet.
The Board has resolved to recommend the rights issue to shareholders at the next annual general meeting scheduled for April 26.
Additionally, an increase in the company’s share capital will be proposed to accommodate the new shares to be allotted under the rights issue.
Managing Director/Chief Executive Officer of Nigerian Breweries Plc, Hans Essaadi, described the rights issue as the first step in the company’s strategic recovery plan for business continuity and future growth.
Despite significant mitigating actions, Essaadi highlighted the recent acceleration of the Naira devaluation, lack of access to hard currency, and high-interest rates as factors pressuring the company’s net profit.
Essaadi emphasized the urgency of repairing the balance sheet to ensure sustainability, asserting that the rights issue would enable Nigerian Breweries to achieve its strategic objectives in line with its recovery plan.
He added that the rights issue would provide all shareholders with a unique opportunity to increase their holdings.
“This process is part of the company’s recovery plan to sustain value for its stakeholders and return the business to profitability,” said Essaadi.
“We remain wholly committed to having a positive impact on our host communities and consumers, leveraging our strong supply chain footprint and excellent execution of our route to market strategy.”
In 2023, the company recorded the first financial loss in almost about 13 years calling for measures aimed at reducing risk to the business by focusing on a positive price mix, efficient sales operations, strong and aggressive cost management, and other efficiency measures.
Recently, the company revealed plans to hike the price of beer marking the third price hike in less than a year for Nigerian consumers.
The company attributed the price increase to the “continued rising input cost” and the need to “mitigate the impact.”
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