Nigeria Breweries has revealed plans to raise up to N600 billion through a rights issue to address challenges posed by the Naira devaluation and high borrowing costs.
Uaboi Agbebaku, the Company Secretary of Nigerian Breweries, disclosed this in a notification sent to the Nigerian Exchange Ltd. (NGX) in Lagos.
Mr Agbebaku stated that the aim was to strengthen its balance sheet and reduce debt burden highlighted by a net loss of N106 billion in 2023.
He noted that the decision was reached at a specially convened meeting of the Board of Directors of the company held on Tuesday.
According to him, proceeds from the rights issue would help to reduce the huge debt burden arising, thereby leading to a healthier balance sheet.
Mr Agbebaku noted that coupled with ongoing cost savings and other operational efficiency efforts, the board is optimistic about steering the company back to the path of sustainable profitability soon.
“The board also resolved to recommend to shareholders at the AGM, the increase in the company’s share capital to take care of the new shares to be allotted under the rights issue,” he said.
Speaking on the development, Hans Essaadi, Managing Director/Chief Executive Officer, Nigerian Breweries Plc, described the rights issue as the first of its actions in its strategic recovery plan for business continuity and future growth.
Mr Essaadi said that despite taking significant mitigating actions, the recent acceleration of the devaluation of the naira, lack of access to hard currency, and high interest rates have led to significant pressure on the net profit of the company.
He noted that this is not sustainable and that now is the appropriate time to repair the balance sheet by using the proceeds of the rights issue to reduce the company’s debt.
According to him, the rights issue will allow Nigerian Breweries to deliver on its strategic objectives in line with its recovery plan.
Mr Essaadi also said it would give all its shareholders a unique opportunity to increase the number of shares they hold.
“This process is part of the company’s recovery plan to sustain value for its stakeholders and return the business to profitability.
“We have been 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.
“We remain wholly committed to having a positive impact on our host communities and our consumers, leveraging our strong supply chain footprint, and excellent execution of our route-to-market strategy.
“Also, our rich portfolio of longstanding and innovative beverage brands across the Lager, Stout, non-alcoholic malt, soft drinks, and energy drinks categories, catering to the varied preferences of our esteemed consumers,” he said.
(NAN)
