Nigerian Breweries Plc, Nigeria’s largest and oldest brewing company, has unveiled plans to utilise proceeds from its ₦599.1 billion Rights Issue to settle overdue foreign exchange (FX) obligations, significantly improving its financial standing and positioning the company for long-term growth.
This strategic move is a key part of Nigerian Breweries’ recovery blueprint aimed at returning the business to profitability and delivering increased value to shareholders amid persistent macroeconomic headwinds.
Details of the Rights Issue Offering
The Rights Issue, which officially opened on 2 September 2024, offers 22.61 billion ordinary shares at ₦26.50 per share. Eligible shareholders are entitled to 11 new shares for every 5 held as of the close of business on 12 July 2024. The offer is scheduled to close on Friday, 11 October 2024.
Speaking during the “Facts Behind the ₦599.1 Billion Rights Issue” session held at the Nigerian Exchange Limited (NGX) on 17 September 2024, Managing Director Hans Essaadi explained that the offering is part of a broader strategy to mitigate the company’s FX exposure and interest expense burdens.
Naira Devaluation and FX Exposure Drive Financial Strain
Essaadi attributed recent financial losses to the steep devaluation of the naira, which significantly increased the cost of settling foreign-denominated obligations, particularly those tied to the company’s capital expansion projects over the past two years.
“These are challenging times. Our expansion required FX commitments that were made prior to the naira devaluation, resulting in significant debt. Despite this, we remain confident in Nigeria’s long-term prospects,” Essaadi stated.
He emphasized that the Rights Issue will help steer the company back to net profitability, enabling it to resume dividend payments and capitalize on a potential macroeconomic rebound.
Diversification and Growth: Wines and Spirits Expansion
As part of its long-term strategy, Nigerian Breweries has expanded its brand portfolio with the acquisition of Distell Wines and Spirits Nigeria Limited. Essaadi described the move as part of the company’s sustainable growth plan, aiming to strengthen its presence in the broader beverage market beyond beer.
NGX Applauds Transparency and Investor Engagement
In his remarks, Jude Chiemeka, Chief Executive Officer of NGX, commended Nigerian Breweries for choosing the ‘Facts Behind the Figures/Issue’ platform to share operational updates and its financial recovery strategy.
“Transparent data sharing builds trust and encourages market participation. Nigerian Breweries’ leadership has demonstrated resilience and a commitment to business continuity despite current economic challenges,” Chiemeka said.
Proceeds Allocation: FX and Local Debt Reduction
Uaboi Agbebaku, Company Secretary and Legal Director of Nigerian Breweries, provided a breakdown of how the funds will be utilized:
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Majority of the proceeds will go towards clearing outstanding FX payables to shield the company from further currency-related volatility.
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The remainder will be applied to reducing local (naira-denominated) debt, lowering the company’s overall interest expenses.
“Our goal is to eliminate FX liabilities and reduce interest burden. This will improve cash flow and enhance our financial resilience,” Agbebaku explained.
A Legacy of Excellence and Innovation
Founded in 1946 and a proud member of the HEINEKEN Group, Nigerian Breweries produced its first bottle of STAR lager in 1949. Today, the company operates nine breweries nationwide, producing and distributing a portfolio of 19 high-quality brands, including Heineken, Maltina, Amstel Malta, Gulder, Fayrouz, and Legend.
The company has also earned multiple awards for its excellence in product quality, innovation, marketing, sustainability, and corporate social responsibility.
For more information, visit www.nbplc.com.
