• Saturday, May 25, 2024
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Shareholders approve Nigerian Breweries N600bn rights issue as devaluation risk weighs

Shareholders approve Nigerian Breweries N600bn rights issue as devaluation risk weighs

Shareholders of Nigerian Breweries Plc have approved the brewer’s capital raising of N600 billion by way of rights issue. They did at the 78th Annual General Meeting of the company held Friday in Lagos.

With this development, the Board now has the authorisation to undertake capital restructuring by way of a rights issue that will enable all the company’s shareholders the opportunity to acquire more shares in proportion to their holdings, at a price determined by the Board taking into consideration the market conditions.

Speaking during the Annual General Meeting, the Interim Chairman of the Board of Directors, Siep Hiemstra, explained that the decision to seek approval for the capital raising is in line with the company’s commitment to improving its financial position and returning the business to profitability while creating value for the shareholders.

According to Hiemstra, the objective of raising fresh capital to the tune of N600 billion is to enable the company settle its outstanding FX payables as well as part of the local bank facilities, which would lead to the elimination of the naira devaluation risk or foreign exchange losses as well as the reduction of huge interest burden on the company. He disclosed that the majority shareholders, Heineken has already indicated its readiness to support the recapitalization exercise by taking up and paying for the portion of the shares allotted to it.

Hiemstra said “Following the challenging year 2023, and the present volatility of the Nigerian business environment, we are focused on our strategic recovery plan backed by parent company Heineken, prioritizing efficiency and agility in all areas of operations; and maintaining market leadership through its rich portfolio of brands. We will continue to demonstrate resilience to deliver value for shareholders and all stakeholders.”

Some of the shareholders who spoke at the meeting described the recapitalization exercise as a step in the right direction noting that it would have a considerable impact on the company’s business growth and performance.

While applauding the company on its business recovery plan, the National Coordinator, Progressive Shareholders Association of Nigeria, Boniface Okezie, stated that there was no better time to make such an audacious move as this would help to significantly improve the company’s performance.

Okezie expressed profound appreciation to the board and management for providing exceptional leadership which has led to its resilience amid adversity.

He said “We believe in the leadership of Nigerian Breweries and we are certain that soon enough, we will reap the benefits of these bold decisions.”

In his remarks, the Managing Director/CEO, Nigerian Breweries Plc, Hans Essaadi, conveyed his gratitude to the shareholders for their support, stating that the company remains committed to delivering long-term growth to its shareholders, despite the current economic headwinds and challenges.

“While we cannot influence the external environment, we are committed to maintaining resilience in the face of adversity. We are confident that the company will remain in a good position to weather the storm. We will sustain a strong cost management culture; optimize our operational footprint; and leverage our strong brand portfolio, exciting innovations and route to consumer to win in the market” he said.

A breakdown of the company’s audited results for the 2023 financial year shows that revenue rose by 9% versus the prior period of 2022, and operating profit declined by 15 percent from N53 billion in 2022 to N45 billion in 2023 due to higher input costs and one-off reorganization costs despite the strong and aggressive cost savings and other efficiency measures.