Nigerian Breweries Plc plans to raise N599.1 billion through a rights issue to address forex losses and reduce local debt burdens. The move aims to stabilize financials and support long-term growth.
[dropcap]N[/dropcap]igerian Breweries Plc has announced a significant rights issue aimed at raising N599.1 billion to address foreign exchange (forex) losses and reduce local debt burdens.
This decision, disclosed at the ‘Facts Behind the Rights Issue’ presentation at the Nigerian Exchange Limited, is part of the company’s strategy to stabilize its financial position amid Nigeria’s high monetary policy rate of 26 percent.
Also read: Report: Nigerian Breweries, International Breweries, Guinness Nigeria booked N254.8bn pre-tax Losses
The company will offer 22.6 billion ordinary shares at 50 kobo each, priced at N26.50 per share. Existing shareholders will be able to purchase 11 new shares for every five they currently hold.
The funds raised will be directed towards settling substantial payables, including N328 billion in forex debts and N263 billion in local debt repayments.
Uaboi Agbebaku, the company Secretary, highlighted that these measures are critical to eliminating forex losses from the balance sheet and reducing interest burdens associated with local debts.
In 2023, Nigerian Breweries reported a N153 billion forex loss due to the naira’s devaluation.
Shareholders have expressed concerns about the company’s financial health and have urged for strategies to mitigate future forex risks.
They advocate for increased investment in research and development and backward integration to reduce dependence on imported raw materials.
Hans Essaadi, the Managing Director of Nigerian Breweries, acknowledged the challenging economic environment but remained optimistic about the company’s future.
He noted that the rights issue is crucial for stabilizing the balance sheet and ensuring long-term growth.
He also highlighted recent strategic moves, including the acquisition of Distell Nigeria, which is expected to enhance profitability and expand the company’s market presence.
The company’s parent company, Heineken, which owns over 67 percent of Nigerian Breweries’ equity, has suspended interest on its foreign loans to help the company meet its obligations.
Jude Chiemeka, CEO of the Nigeria Exchange Limited, praised Nigerian Breweries for its proactive approach and encouraged the company to leverage its listing on the exchange for improved capital access, global profile, and liquidity., Forex Losses, Debt Reduction, Nigerian Exchange Limited, Heineken Support, Distell Acquisition
