Cadbury Nigeria Plc (CADBURY) has stated its intention to issue additional share capital of 402,082,657 ordinary shares at 50 kobo each, increasing its total share capital by 21.41 percent to N1.14billion, according to a recent statement released January 9, 2024.
This development stemmed from an outstanding debt of $7.72million (c. N7.04billion) owed to its parent company – Cadbury Schweppes Overseas Limited (“Cadbury Schweppes Overseas”).
In its resolution, the debt of N7.04billion would be converted to additional shareholding in CADBURY. This brings the total shareholding of Cadbury Schweppes Overseas to 1,810,214,310, approximately 79.39percent in CADBURY.
As such, free float is expected to decline to 20.59percent which is still within NGX’s free float requirement.
The conversion of the total debt of N7.04billion is anticipated to reduce the company’s total debt by 1.98percent (versus N45.52billion in 2023FY) and by 10.06percent (versus N49.61billion as of 9M:2023), bringing it down to N44.62billion in 2024FY.
“We note that the bulk of CADBURY’s debt balance is on intercompany loans and import finance facilities. This reduction will positively impact the company’s finance costs, ultimately enhancing
its bottom line.
“However, we note the potential dilution to the company’s existing shareholders and a likely reduction in earnings per share
to N0.79 (from N0.95). Notwithstanding, we maintain our target price of N26.37 for 2024FY.
“The proposed transaction is still subject to approval by the Board and relevant regulatory authorities,” Meristem analysts said.
