By Dipo Olowookere
One of the leading beer makers in the country, Nigerian Breweries Plc, intends to source about N600 billion from the capital market through a rights issue.
A notice from the brewer on Wednesday disclosed that proceeds from the exercise would be used to ease its “huge debt burden” arising from the devaluation of the Naira.
The decision of the Central Bank of Nigeria (CBN) to devalue the Naira has continued to have a negative impact on businesses in the country, with some packing up.
Nigerian Breweries has not been spared of this, and to return the firm to the “path of sustainable profitability in the near future,” the board wants about N600 billion to complement the other strategic steps taken to make the company viable, including increasing the prices of its products.
In the disclosure today, the board said the decision to raise the fresh funds was reached at “a specially convened meeting of the board of directors of the company” on Tuesday.
However, to achieve this, it would need the approval of the organisation’s shareholders at the Annual General Meeting (AGM) fixed for April 26, 2024.
The shareholders will also be required to approve an increase in the company’s share capital to accommodate the new shares to be allotted under the rights issue.
“Nigerian Breweries Plc hereby informs the Nigerian Exchange Limited and the investing public that at a specially convened meeting of the board of directors of the company held on April 2, 2024, the board resolved to recommend to shareholders at the next Annual General Meeting (AGM) the raising of up to N600 billion capital by way of rights issue, subject to regulatory approvals.
“Due to the negative impact of the devaluation of the Naira and the high cost of funds on the company’s capital structure, especially on the company’s debts, the proceeds from the rights issue will help to reduce the huge debt burden arising, thereby leading to a healthier balance sheet.
“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 in the near future.
“The board also resolved to recommend to shareholders at the AGM scheduled for April 26, 2024, the increase in the company’s share capital to take care of the new shares to be allotted under the rights issue,” the statement stated.