The application for Nigerian Breweries Plc rights issue of 22,607,491,232 ordinary shares of 50 kobo each at N26.50 per share has been approved by the Nigerian Exchange Limited (NGX).
The biggest brewer in the country plans to raise N600 billion through a rights issue to clear its N500 billion foreign exchange (FX) debt. The company has been battling foreign exchange (FX) 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,” said Hans Essaadi, managing director/chief executive officer, Nigerian Breweries Plc.
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The brewer is offering to existing shareholders eleven (11) new ordinary shares for every existing five (5) ordinary shares held as at the close of business on Friday, July 12, 2024.
Vetiva Advisory Services Limited and Stanbic IBTC Capital Limited are issuing houses/financial advisers of the rights issue which was approved on August 22, while the stockbrokers are Stanbic IBTC Stockbrokers Limited; Vetiva Securities Limited; Foresight Securities & Investments Limited; Greenwich Securities Limited; and Lighthouse Capital Limited.
Nigerian Breweries Plc continues to navigate the challenging operating environment characterised by soaring inflation, exchange rate volatility, security challenges, elevated input costs, and rising cost of living.
It recently announced its unaudited and provisional results for the half year (six months) ended June 30, 2024 which showed the group reported Loss After Tax (LAT) of N85.199billion as against LAT of N47.599billion in H1 of 2023, representing an increase by 79 percent.
Though, the brewer’s group revenue grew by 72.9 percent to N479.767billion from N277.419billion in H1’2023, its net finance expense spiked by 60.5percent to N154.480billion from N96.223billion.
The Company said it continues to navigate the challenging operating environment characterised by soaring inflation, exchange rate volatility, security challenges, elevated input costs, and rising cost of living.
Further look at the H1’24 financial result shows Nigerian Breweries Loss Before Tax (LBT) printed higher by 71.5 percent to N116.341billion from N67.844billion in H1’23.
“Despite these headwinds, the Company has demonstrated resilience and is on the path to recovery in its operations. Revenue grew by 73percent in the half year compared to the same period in 2023.
“The growth was driven by strategic pricing, innovation, volume and market recovery. Gross Profit grew by 42percent, although lower than the rate of growth in revenue, due to a 93percent increase in the cost of goods sold driven by currency devaluation and inflation,” Nigerian Breweries said in its earnings release.
Essaadi said that in the 6 months ended June 30, 2024, Nigerian Breweries demonstrated resilience “and is on the path to recovery as seen in the results delivered despite the challenging external environment characterised by high inflation and heightening operating costs.”
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At its pre-annual general meeting (AGM) press conference, Uaboi Agbebaku, company secretary and legal director at Nigerian Breweries said, “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”.
Agbebaku said Nigerian Breweries majority shareholder, Heineken Plc, had committed to raising over 50 percent of the N600 billion target.
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.
