Nigerian Breweries Plc Seeks to Reduce Foreign Exchange Losses with N599.1bn Rights Issue
Nigerian Breweries Plc, a leading brewer in Nigeria, has announced plans to reduce its foreign exchange losses by issuing a rights issue worth N599.1 billion. The move aims to eliminate forex losses from the company’s balance sheet and reduce its interest burden on local debts amid Nigeria’s 26 per cent monetary policy rate.
According to Uaboi Agbebaku, the company’s secretary, the rights issue will offer 22.6 billion ordinary shares at 50 kobo each, at N26.50 per share, allowing shareholders to purchase 11 new shares for every five they currently hold. The proceeds will be used to settle the company’s payables, including N328 billion in forex debts and N263 billion in local debt repayments.
Nigerian Breweries has been struggling with foreign exchange losses, which have affected its financial performance. The company suffered a N153 billion forex loss in 2023 due to the devaluation of the naira. However, Hans Essaadi, the Managing Director, expressed optimism about the company’s future, stating that it has “completely future-proofed” its business.
The company is also seeking to reduce its reliance on imported raw materials by increasing investments in research and development, as well as backward integration. Shareholders urged the management to adopt forward-looking strategies to mitigate future FX risks and reduce its interest burden.
Heineken, the brewer’s parent company, which holds over 67 per cent of Nigerian Breweries’ equity, has suspended interest on its foreign loans to enable the company to meet its financial obligations. Despite the economic pressures, Essaadi reiterated the company’s long-term commitment to the Nigerian market.
The Chief Executive Officer of the Nigeria Exchange Limited, Jude Chiemeka, commended Nigerian Breweries for using the platform to present its financial performance and strategic plans. He encouraged the company to continue leveraging the benefits of listing on the exchange, such as improved access to capital, increased global profile, and access to liquidity.
With this rights issue, Nigerian Breweries is taking steps to stabilize its balance sheet and ensure long-term growth. The company’s success will depend on its ability to execute its plans and adapt to the challenging business environment in Nigeria.
