Nigerian Breweries N599 Billion Rights Issue To Eliminate Forex Exposure, Reposition Business Performance
By Frederick Wright
Nigerian Breweries Plc, has disclosed its intention to utilise the proceeds from its N599.1 Billion Rights Issue to eliminate overdue foreign exchange commitments, thereby repositioning the company for optimum business performance that will enable it to deliver value for its stakeholders.
The company is offering 22.61 billion ordinary shares at 50k each, priced at N26.50 per share to its shareholders. The Rights Issue commenced on September 2, 2024, and will close on Friday, October 11, 2024.
The offer is open to all existing shareholders giving them the opportunity to increase their shares in the company at the ratio of 11 new shares for every five held at the close of business on July 12, 2024.
Speaking during the “Facts Behind the N599.1 Billion Rights Issue” presentation at the Nigerian Exchange Limited, NGX, on Tuesday, the Managing Director of Nigerian Breweries Plc, Hans Essaadi, explained that the losses recorded in its financial statements was due mainly to the impact of the currency devaluation on foreign exchange denominated payables and higher interest expenses.
“These are tough times for our business. We started expanding our facilities two years ago, for which FX commitments were required, with a view to future-proofing the business. This led to our incurring a substantial debt due to the devaluation of the naira. Despite this challenge amongst others, we believe that investing in Nigeria is the right thing to do as the long-term fundamentals remain strong” he said.
Essaadi assured shareholders that the Rights Issue will return the company to the path of net profitability and the resumption of dividend payments as soon as possible, adding that the company was in a position to take advantage of an improvement in the macro economic operating environment.
He added that the company’s expansion into the wine and spirits category through the acquision of Distell Wines and Spirits Nigeria Limited was in furtherance of its commitment to grow sustainable value for its shareholders.
Also speaking during the presentation, the Chief Executive Officer of NGX, Jude Chiemeka, noted that ‘Facts Behind the Figures/Issue’ remains a platform to support its mission to enhance transparency and stimulate engagement in the capital markets.
He added that the NGX was delighted that Nigerian Breweries Plc chose the platform to present its financial performance, operational updates, and strategic business recovery plan including the N588.1 Billion Rights Issue.
According to Chiemeka, sharing timely and accurate data is essential for driving market activity, as it strengthens trust and fosters greater participation.
While acknowledging the efforts of the company’s leadership in enhancing operations, promoting business continuity, and restoring investor confidence amidst economic challenges, he stated that its commitment to these goals reflects the resilience and adaptability that are essential in today’s market environment.
In his remarks, the Company Secretary & Legal Director, Nigerian Breweries Plc, Uaboi Agbebaku, stated that the proceeds from the rights issue will be used to eliminate all outstanding FX payables so that the company will no longer be subject to the vagaries of devaluation.
“A major part of the proceeds will be utilised for the repayment of overdue FX obligations while the remaining will be used to repay and lower local debt (naira) obligations, thereby reducing the interest burden on the company” he said.
