• Thursday, May 23, 2024
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Why Nigerian Breweries plans to raise N600bn via rights issue

Shareholders approve Nigerian Breweries N600bn rights issue as devaluation risk weighs

Nigerian Breweries Plc, the biggest brewer in the country, plans to raise N600 billion in August through a rights issue to clear its N500 billion foreign exchange debt.

Uaboi Agbebaku, company secretary and legal director at Nigerian Breweries, made this known at its pre-annual general meeting press conference in Lagos on Wednesday.

“The company-wide reorganisation aimed at securing a resilient and sustainable future for its stakeholders includes raising N600 billion via rights issue to offset the company’s huge debt burden, both foreign and local, which continues to hurt its profitability,” he said.

“The additional capital raised via rights issue will be used for payments of all overdue FX debts and payables, eliminate FX exposure, and strengthen the company’s balance sheet and liquidity position, returning it to the path of net profitability as soon as possible,” he added.

Agbebaku said the company’s majority shareholder, Heineken Plc, had committed to raising over 50 percent of the N600 billion target.

Hans Essaadi, managing director/chief executive officer of Nigerian Breweries said the company which has been operating in the Nigerian market has been battling foreign exchange losses, as the country continues to struggle with dollar scarcity.

“The tough business landscape characterised by double-digit inflation rates, naira devaluation, FX challenges, and diminished consumer spend has taken its toll on many businesses, including ours,” he said.

He added that this is why the company has decided to further consolidate its business operations for efficient cost management and optimal use of its resources for future sustainable growth.

The company had earlier indicated plans for a company-wide reorganisation which include the temporary suspension of operations in two of its nine breweries.

Sade Morgan, director of corporate affairs at Nigerian Breweries said, “Our 2024 recipe for success is hinged on our strong business recovery plan to continue strong cost management and further optimisation of our operational footprint.”

“We would continue to leverage our strong portfolio, exciting innovations, delight our customers with exciting new portfolios, while prioritising our employees, communities, and stakeholders,” she added.