Leading brewer, Nigerian Breweries Plc has announced its plan to raise about N600 billion fresh capital to boost ot business.
The company made the disclosure to the Nigerian Exchange Limited and other stock market stakeholders on Tuesday.
The venture will be achieved through a rights issue and 22,607,491,232 Ordinary Shares of N0.50 each at N26.50 per share will be sold to shareholders of the company.
“The company has obtained the approval of the Securities and Exchange Commission to commence the Company’s Rights Issue of 22,607,491,232 Ordinary Shares of N0.50 each at N26.50 per share. This is being offered to existing shareholders on the basis of 11 new Ordinary Shares for every 5 Ordinary Shares held as at 12th July 2024, being the qualifying date,” a statement issued by NB Plc disclosed.
It further noted that the Rights Circular will be sent to all shareholders recorded in the register of members as at that date. The Offer opened on Monday, 2nd September 2024, and closes on Friday, 11th October 2024.
The move to reaise the fresh capital came after the company recorded a net loss of approximately N106 billion in its 2023 full year results. The loss follows a combination of challenging economic factors ranging from heightened operational costs, continued pressure on consumer disposable income, escalating inflation rates, FX volatility, and high cost of debts, amongst others.
The Rights Issue is a measure to restore the company’s balance sheet to a healthy position following the net finance expenses of N189 billion recorded in 2023 driven mainly by a foreign exchange loss of N153 billion resulting from the devaluation of the naira. The proceeds from the Rights Issue would help to reduce the debt burden, paving the way for a more robust financial position. Coupled with ongoing efforts in cost-saving initiatives and operational efficiencies, the Board is optimistic about steering the company back towards sustainable profitability in the near future.
Speaking on this development, Managing Director/CEO Nigerian Breweries Plc, Hans Essaadi described the Rights Issue as the first of its actions in its strategic recovery plan for business continuity and future growth, in the face of a persistently challenging operating environment.
“Despite taking significant mitigating actions, the recent acceleration of the devaluation of the Naira, the lack of access to hard currency, and high interest rates has led to significant pressure on the net profit of Nigerian Breweries. This is not sustainable and now is the appropriate time to repair the balance sheet by using the proceeds of the rights issue to reduce the company’s debt”.
“This Rights Issue will allow Nigerian Breweries to deliver on its strategic objectives in line with our recovery plan, and give all our shareholders a unique opportunity to increase the number of shares they hold.”
Essaadi also stated that this process is part of the company’s recovery plan to sustain value for its stakeholders and return the business to profitability, commenting “We have been here in Nigeria for more than 77 years and, while it has been challenging in recent times for many Nigerian businesses, we believe in the long-term growth of the Nigerian market as evidenced by our decision to offer this Rights Issue.”