Nigerian Breweries Plc (NGX: NB) will be raising ₦600 billion capital by way of Rights Issue to address the company’s huge debt burden.
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This was disclosed in a regulatory filing on Wednesday signed by Uaboi G. Agbebaku, FCIS, the Company Secretary.
The Board of Directors of the Brewer at a specially convened board meeting held n 2nd April, 2024, resolved to recommend the Rights Issue to shareholders at the next Annual General Meeting (AGM).
At the AGM due to hold on 26th April, 2024, a special business resolution will be put to shareholders to consider and if thought fit approve that;
“That subject to obtaining the approval of the relevant regulatory authorities, the Directors of the Company be and are hereby authorised to raise capital of up to ₦600 billion (six hundred billion naira) by way of Rights Issue, through the issuance of ordinary shares, on such other terms and conditions and at such time, as the Directors may deem fit or determine.”
The shareholders will also be asked to consider and if thought fit approve an increase in the Company’s share capital to take care of the new shares to be allotted under the Rights Issue.
Due to the negative impact of the devaluation of the naira and the high cost of funds on the Company’s capital structure, especially on the Company’s debts, the proceeds from the Rights Issue will help to reduce the huge debt burden arising thereby leading to a healthier balance sheet.
A rights issue is an invitation to existing shareholders to purchase additional new shares in the company. This type of issue gives existing shareholders securities called rights. With the rights, the shareholder can purchase new shares at a discount to the market price on a stated future date.
NB has 10.27 billion outstanding shares, and with its share price closing at ₦29.05 on Wednesday, its market capitalization stood at ₦298.52 billion.
Nigerian Breweries Plc posted a a revenue of ₦599.64 billion (2022: ₦550.63 billion) for the 2023 financial year ended 31 December, 2023. A net loss of ₦153.33bn on foreign exchange transactions in the year (2022: loss of ₦26.34bn) wiped out the company’s ₦43.96bn (2022: ₦51.75bn) operating profit, and condemned it to a ₦106.30bn loss after tax (2022: ₦13.18bn).
A review of the Company’s balance sheet for 2023 financial year shows that NB is sitting on ₦732.588bn liabilities against ₦795.87bn assets.
Of these liabilities, ₦341.60bn are interest-bearing loans and borrowings, while ₦355.28bn is trade and other payables.
Nnamdi Maduakor is a Writer, Investor and Entrepreneur
