Nigerian Breweries (NB) Plc, said it will be raising capital of up to N600 billion by way of a rights issue to restore the company’s balance sheet to a healthy position.
The Company said it has begun the implementation of its strategic business recovery plan aimed at securing a resilient and sustainable future for its shareholders and other stakeholders.
It added that “this move comes after the company recorded a net loss of approximately N106 billion in its 2023 full year results. The loss follows a combination of challenging economic factors ranging from heightened operational costs, continued pressure on consumer disposable income, escalating inflation rates, FX volatility, and high cost of debts, amongst others.”
The rights issue, which will be proposed to the company’s shareholders at the Annual General Meeting scheduled for April 26, 2024, is a measure to restore the company’s balance sheet to a healthy position following the net finance expenses of N189 billion recorded in 2023 driven mainly by a foreign exchange loss of N153 billion resulting from the devaluation of the naira.
The proceeds from the rights issue would help to reduce the debt burden, paving the way for a more robust financial position. Coupled with ongoing efforts in cost-saving initiatives and operational efficiencies, the Board is optimistic about steering the company back towards sustainable profitability in the near future.
Speaking on this development, managing director/CEO of Nigerian Breweries Plc, Hans Essaadi described the rights issue as the first of its actions in its strategic recovery plan for business continuity and future growth, in the face of a persistently challenging operating environment.
“Despite taking significant mitigating actions, the recent acceleration of the devaluation of the Naira, the lack of access to hard currency, and high interest rates has led to significant pressure on the net profit of Nigerian Breweries. This is not sustainable and now is the appropriate time to repair the balance sheet by using the proceeds of the rights issue to reduce the company’s debt.”
“This rights issue will allow Nigerian Breweries to deliver on its strategic objectives in line with our recovery plan, and give all our shareholders a unique opportunity to increase the number of shares they hold,” he said.
Essaadi also stated that this process is part of the company’s recovery plan to sustain value for its stakeholders and return the business to profitability, saying “we have been here in Nigeria for more than 77 years and, while it has been challenging in recent times for many Nigerian businesses, we believe in the long-term growth of the Nigerian market as evidenced by our decision to offer this rights issue.”
We’ve got the edge. Get real-time reports, breaking scoops, and exclusive angles delivered straight to your phone. Don’t settle for stale news. Join LEADERSHIP NEWS on WhatsApp for 24/7 updates →
Join Our WhatsApp Channel
