Nigerian Breweries to clear FX, local debt with N599bn Rights Issue
By Chukwuma Umeorah
Nigerian Breweries Plc has said that it is raising N599.1 billion through a rights issue on the Nigerian Exchange Limited (NGX) to address its mounting 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.
During the company’s “Facts Behind the Rights Issue” presentation at the NGX on Tuesday, Uaboi Agbebaku, the Company Secretary, explained 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 have 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 explore 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 saying “We have completely future-proofed our business. Some measures taken by the new administration in the country are very painful, but the believe 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 to company cope with the financial burden.
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 believe would further improve profitability and ensure a strong future presence in the Nigerian market.
In his address, Mr Jude Chiemeka, Chief Executive Officer (CEO)Nigeria Exchange Ltd.(NGX) praised the management of Nigerian Breweries for their commitment. He noted that sharing timely and accurate data was essential for driving market activity, as it strengthens trust and fosters greater participation.
He said “In the face of challenges, the NGX acknowledges the commendable efforts of Nigerian Breweries Plc’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 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.
