Nigerian Breweries to Clear Debts With N599bn Rights Issue
Kayode Tokede
The management of Nigerian Breweries Plc, yesterday said that it is raising N599.1 billion through a rights issue on the Nigerian Exchange Limited (NGX) to address its financial obligations.
The company is offering 22.6 billion ordinary shares at 50 kobo each, priced at N26.50 per share, allowing shareholders to buy 11 new shares for every five held.
Speaking to capital market community at company’s “Facts Behind the Rights Issue” presentation in Lagos, the Company Secretary, Nigerian Breweries, Mr. Uaboi Agbebaku, stated that the proceeds will be used to clear the company’s payables, including N328 billion in foreign exchange (FX) debts and N263 billion in repayments of local obligations.
Agbebaku stressed that the move is aimed at eliminating FX losses from the company’s balance sheet and reducing its interest burden on local debts, amid Nigeria’s 26 per cent Monetary Policy Rate (MPR).
“Our FX losses are substantial, and clearing these obligations will stabilize our profit and loss accounts. We are also working to reduce local bank debts. The impact of that also is that it will eventually reduce the interest burden that we are carrying, which has been a significant financial strain,” Agbebaku stated.
Nigerian Breweries had faced a challenging financial period, posting a loss after tax of N85.3 billion for the first half of 2024, mainly due to rising inflation, FX costs, operating expenses, and broader economic headwinds.
Concerned about the company’s health, Shareholders present urged the company to mitigate future FX risks by exploring forward-looking strategies, including backward integration and increased investment in Research and Development to reduce dependence on imported raw materials.
The Company’s Managing Director, Hans Essaadi, noted that while the company was ramping up efforts in areas possible to return to profitability, Nigeria’s volatility and the broader economic challenges were impacting its performance.
He, however, expressed optimism stressing that “We have completely future-proofed our business. Some measures taken by the new administration in the country are very painful, but the belief is that we would begin to see positive outcomes in the mid-long term. The moment we see inflation, interest rates and other economic indicators become better, I can assure you that the results will be better.”
Essaadi revealed that Heineken, the parent company, holding over 67 per cent of its equity had suspended the interest they charged on their foreign loan to enable the company to meet up with the financial obligations.
“Despite economic pressures, he reiterated the company’s commitment. “We have been in this market for nearly 80 years and weathered many storms. This rights issue is essential to stabilizing our balance sheet and ensuring long-term growth,” he said.
He noted that the company had expanded its portfolio with the acquisition of Distell Nigeria, marking its entry into the wine, spirits, and ready-to-drink segments. This is believed would further improve profitability and ensure a strong future presence in the Nigerian market.
Earlier, Chief Executive Officer, Nigeria Exchange Ltd.(NGX), Jude Chiemeka expressed satisfaction that Nigerian Breweries chose the platform to present its financial performance, operational updates, and strategic plans for its Rights Issue.
Chiemeka noted that sharing timely and accurate data is essential for driving market activity, as it strengthens trust and fosters greater participation.
He added that in the face of ongoing economic challenges, NGX acknowledges the commendable efforts of Nigerian Breweries’s Board and Management in enhancing operations, promoting business continuity, and restoring investor confidence.
“Your dedication to these goals reflects the resilience and adaptability that are essential in today’s market environment.
“I, therefore, use this opportunity to invite Nigerian Breweries Plc and all stakeholders to leverage the benefits of listing on the Exchange, including improved access to capital, increased global profile and access to liquidity,” he said.
