The goal of NB’s N600 billion rights issue was to stabilise operations and expedite business recovery plans

Apr 22, 2024 | Health | 0 comments

Nigerian Breweries (NB) Plc recently notified the Nigerian Exchange Group (NGX) of its plan to raise ₦600 billion through a Rights Issue. The issue is solely aimed at injecting capital to clear the backlog of debts incurred due to foreign exchange (FX) volatility and restore the balance sheet to a healthy position, the management has stated.

Mr. Hans Essaadi, the Managing Director and Chief Executive Officer of Nigerian Breweries Plc, disclosed the company’s 2023 Pre-AGM (Annual General Meeting) in Lagos.

Essaadi explained that the offer was the largest in Nigeria and was intended to accelerate business recovery with a capital injection, which is the only way to remain in business in the long term.

While reaffirming the company’s commitment to growing Nigeria’s economy and its continued investment in the country, he said the ₦600 billion offer met all the requirements for the company’s recovery plans to navigate out of its current economic trajectory, providing an option to use debt to pay for shares.

Essaadi noted that the naira devaluation resulted in a ₦153 billion forex loss in 2023, net finance expenses of ₦189 billion recorded in 2023, and an FX loss of approximately ₦106 billion in 2023.

The NB CEO specifically stated that the company’s debt and overdue payables amounted to ₦542 billion at the end of 2023.

Speaking on the usage of proceeds, he said: “Payment of all overdue FX debts and payable, remaining proceeds to be used to reduce local naira debt and strengthen the balance sheet and liquidity position and improve shareholders’ funds.”

Regarding the benefits of the ₦600 billion rights issue, Essaadi stated: “Elimination of FX exposure and partial reduction of interest expenses. Improved Free Operating Cash Flow (FOCF) driven by a reduction of interest expense. Return business to profitability as soon as possible driven by elimination of FX losses and lower interest expenses. And improve the current gearing level.”

He assured prospective subscribers of the company’s rights issue to take advantage of the opportunity, saying, “this is the time for everybody and lovers of Nigerian Breweries to further invest in the company as the company is here in Nigeria for the long term, having spent 78 years in Nigeria’s business clime.”

Speaking on the company’s special request targeting an exchange rate of N750-N900 to $, Essaadi said: “The timing for the naira being strong against the dollar is right as a self-imposing rate.

“But like our target today, it’s getting closer, and it doesn’t mean that anytime, until the next few weeks, next few months, whether we will see stability.

“In other words, we are in an industry that is related to excellence. So, the effects of last year and this year speak and in the reversal, we have a roadmap and with us and again with this administration, we are looking at forex that is manageable and predictable to boost productivity.”

“Speaking on pricing, the effect of FX that we see today has nothing to do with the way we approach our market. There is already what we call a direct effect disruption in most of the markets.

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