International Breweries has announced that it has received approval from the Securities Exchange Commission (SEC) to proceed with is proposed Rights Issue.
This was contained in the company’s notice to the Nigerian Exchange Limited seen by Nairametrics.
The Rights Issue will offer 161,172,395,100 Ordinary Shares at 2 Kobo each, priced at N3.65 per share valued at N588,279 billion.
The company noted that shareholders will be able to subscribe on the basis of six (6) new ordinary shares for every one (1) existing ordinary share held.
The statement reads:
“International Breweries Plc is pleased to notify its esteemed Shareholders, Stakeholders, Nigerian Exchange Limited and the general public, that the Company has obtained approval from the Securities Exchange Commission to offer to the shareholders the proposed Rights Issue of 161,172,395,100 Ordinary Shares of 2 Kobo each at N3.65 Per Share, on the basis of six (6) new ordinary shares for every one (1) existing ordinary share held”.
The company noted that the qualification date for the rights issue is May 2, 2024 while the application list opened on May 21, 2024, and will close on June 10, 2024, as approved by the Commission.
It added that the Rights circular will be distributed to shareholders by the Company’s Registrars, while application forms will also be made available on the websites of the Company and the Registrars for ease of access.
The statement signed by the Company Secretary / Legal Counsel Dr (Mrs.) Marian Reginald-Ukwuoma advised shareholders to contact their stockbrokers and other financial advisers for more details of the offer.
Shareholders of International Breweries had last February approved the company’s quest to raise additional equity capital through a rights issue to existing shareholders.
International Breweries has been facing escalating losses over the past half-decade. Despite revenue growth, the company recorded an unaudited pre-tax loss of N87.64 billion for 2023, a significant increase from the N26.84 billion pre-tax loss reported in FY 2022.
As of December 31, 2023, International Breweries’ loan portfolio stood at N374.339 billion. Notably, a $424 million loan from Citi Bank in 2018, with an outstanding balance of $389.08 million (2022: $309 million), was rolled over in 2021 for an additional three-year period.
In response to its financial difficulties, International Breweries has initiated a strategic plan to address its debt burden. At its Extraordinary General Meeting on April 15, 2024, the company proposed and received approval for a shareholder convertible loan of $379.9 million from AB InBev Nigeria Holdings BV to repay the Citi Bank loan.
Additionally, the funds from the shareholder loan will be used for any shares subscribed to by AB InBev Nigeria Holdings BV in the company’s Rights Issue, which has been approved by the shareholders.
What you should know
International Breweries recorded a 21% increase in turnover, reaching N264.28 billion in 2023, up from N218.65 billion in 2022. In Q4 2023, the company’s revenue rose to N80.50 billion, marking a 38% year-on-year increase from the N52.22 billion posted in Q4 2022.
The company was significantly impacted by the Naira devaluation in 2023, resulting in a net foreign exchange loss of N72.47 billion, a 437.6% increase from the N13.47 billion net FX loss recorded in 2022. Additionally, the interest expense on the company’s borrowings increased to N24.75 billion in FY 2023, a 247% rise from the N7.14 billion recorded in FY 2022.
To mitigate the risk of exchange rate fluctuations on its outstanding loan balance of $389.08 million with Citi Bank, the company has employed non-deliverable forward contracts for managing interest and principal payments.