N600bn Recapitalisation Schemes To Offset FX Losses, Others – NB

Nigerian Breweries (NB) Plc has disclosed that the proposed N600 billion recapitalisation schemes by way of rights issue would settle N153 billion outstanding foreign exchange (FX) losses and part of its local bank debt facility.

The managing director/chief executive officer of NB, Hans Essaadi disclosed this at the Company pre- AGM press conference held in Lagos. He stated that the company is currently exploring various options to improve the company’s financial position and restore it to a path of sustainable profitability.

According to him, the board has resolved to propose to shareholders at its coming annual general meeting for consideration and approval of a recapitalisation scheme by way of rights issue with the objective to raise fresh capital up to N600 billion that would be used to settle the outstanding FX payables and part of the local bank facilities.

He noted that, “the Board is convinced that this is the best option at this point in time as the shareholders will have the opportunity to acquire more shares in the Company in proportion to their holding, at a price to be determined by the Board taking market conditions into consideration.

Essaadi revealed that its majority shareholder, Heineken NV, has indicated its readiness to support the recapitalisation proposal and to take up and pay for its portion of the shares that would be allotted to it, saying that this again shows the long-term commitment of Heineken N.V.

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Also, he said, Nigerian Breweries aims to acquire an 80 per cent stake in Distell Wines & Spirits Nigeria Limited by the end of the first half of the year.

He further said: “the final part of the transaction is being completed at the South Africa end with the expectation that the transaction would be completed in full in the second quarter of this year.

“This is a strategic acquisition that is in furtherance of our beyond beer agenda and which would provide us with a complimentary multi-category portfolio and strengthen our market share in the wider beverages market.

“More importantly, it will help us to future-fit our business and enhance our long-term profitability through the addition of new products in the wines, spirits, and flavoured beverages categories.”

For the year ended December 31, 2023, NB’s revenue grew from N551 billion in 2022 to N600 billion in 2023, while the operating profit declined by 15 per cent from N53 billion in 2022 to N45 billion in 2023 due to higher input cost and one-off reorganisation cost, despite the strong and aggressive cost savings and other efficiency measures.

However, the Company recorded a net loss of N106 billion during the year primarily due to the impact of the devaluation of the naira which resulted in a FX loss of N153 billion, and higher interest costs on loans and borrowings for capacity expansion.