McNichols Raises N265.62m Via Rights Issue For Expansion

McNichols Consolidated Plc is raising N265.621 million through right issues for business expansion.

The rights issue officially kicked off on August 9, 2023, and is expected to close on August 31, 2023. The company intends to sell about 531.243 million ordinary shares to shareholders for 50 kobo per unit on the basis of 17 ordinary shares for every 23 ordinary shares held as of September 16, 2022.

McNichols stated that the rights issue is being undertaken to enable the company improve its working capital and expansion projects, saying, the use of the proceeds is to procure a new cube sugar plant, packaging equipment to meet the growing needs of customers, procure distribution vehicles, depot & operating location expansion and improve working capital to increase our sales and profitability.

Chairman, McNichols Consolidated, Olusegun Layode,  stated that, “our key strategy is to play in the mass market for food and beverage products. We however take advantage of unique opportunities in food supplements and the premium segment of the food and beverage market.

He noted that, “with a growing youthful population, estimated at more than half of its entire population, Nigeria presents one of the best opportunities for consumer goods businesses anywhere in the world.

“In order to beat competition, industry players have adopted various strategies; aggressive advertising and promotion campaigns, increased brand & product lines capacity, with a view to capturing the rising demand thereby increasing market share.”

He added that “being a high growth sector, this has naturally attracted a number of fringe players over the last few years, consequently increasing the level of competition in the sector thereby putting mild pressure on sector margins.

“That notwithstanding, the room for growth is still very huge and can accommodate the new entrants. Success in this sector will be determined by product reach, other success factors include brand recognition and visibility, consumer loyalty, good product mix, production efficiency and availability of products in the market place and population growth rate.”

Layode pointed out that “the business prospects for the sector remain clearly positive. Government’s aggressive plan in diversifying the Nigerian economy will increase the economic activities in the sector and the government’s attention to fiscal discipline promises to positively affect the purchasing power of the average consumer thereby increasing the fortunes of the sector.

“With a favourable environment and in the absence of unforeseen circumstances, the Board of Directors are confident that McNichols’ going concern status is assured.”

McNichols commenced operations in April 2005 as a manufacturing, packaging and distribution company, engaged in its first few years in the processing and packaging of sugar, chocolate powder, cereals and other food products. McNichols was listed on the floor of the Nigerian Exchange on December 18, 2009.