Nigerian Breweries raises N599bn to clear debts, FX

Nigerian Breweries Plc says it is raising N599.1 billion through rights issue on the Nigerian Exchange Ltd. to eliminate overdue Foreign Exchange payable and reduce local debts.

The News Agency of Nigeria reports that Nigerian Breweries had faced a challenging financial period, posting a loss after tax of N85.3 billion in the first half of 2024.

The company attributed the loss mainly to rising inflation, FX costs, operating expenses and broader economic headwinds.

For the rights issue, the company is offering 22.607 billion ordinary shares at 50k each, priced at N26.50 per share, which opened Sept. 2 and would close on Oct.11.

The offer allows shareholders to buy 11 new shares for every five held as at the close of business on July 12.

The Company Secretary, Nigerian Breweries, Mr Uaboi Agbebaku, confirmed this at the presentation of the firm’s Facts Behind the Rights Issue at the NGX in Lagos on Tuesday.

Agbebaku explained that the proceeds would be used mainly to clear the company’s payables, including N328 billion in foreign exchange (FX) debts and N263 billion in repayments of local obligations.

He noted that the plan was to eliminate foreign exchange losses from the company’s balance sheet and reduce 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 stabilise our profit and loss accounts.

“We are also working to reduce local bank debts.

“The impact of that is that it will eventually reduce the interest burden that we are carrying, which have been a significant financial strain,” he said

In his address, the Managing Director, Nigerian Breweries, Mr Hans Essaadi, said that though the company was striving in possible areas to return to profitability, Nigeria’s volatility and the broader economic challenges were impacting its performance.

Essaadi expressed optimism that the company would bounce back, noting that Nigerian Breweries had completely future-proofed its business.

He noted that while some measures taken by the new administration in the country were very painful, there was hope 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 our results will be better,” the managing director said.

Essaadi said that Heineken, the parent company of Nigerian Breweries holding over 67 per cent of its equity had suspended the interest it was charging on the Brewer foreign loan to enable the company meet up with the financial obligations.

“We have been in this market for nearly 80 years and weathered many storms.

“This rights issue is essential to stabilising our balance sheet and ensuring long-term growth,” he said.

According to him, the company had also expanded its portfolio with the acquisition of Distell Nigeria, marking its entry into the wine, spirits, and ready-to-drink segments.

This, he said, would further improve profitability and ensure a strong future presence in the Nigerian market.

In his address, the Chief Executive Officer, Nigeria Exchange Ltd. (NGX), Mr 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 was essential for driving market activity, as it strengthened trust and fostered greater participation

He said that in the face of ongoing economic challenges, NGX acknowledged the commendable efforts of Nigerian Breweries Plc’s Board and Management in enhancing operations, promoting business continuity and restoring investors’ 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.