NB to Seek Shareholders’ Approval to Raise N600bn via Rights Issue
The management of Nigerian Breweries (NB) Plc has said it is set to seek shareholders’ approval to raise N600 billion fresh capital via rights issue at its forthcoming Annual General Meeting (AGM) in Lagos.
The acting Chairman, Nigerian Breweries Plc, Mr. Sijbe “Siep” Hiemstra in a document, stated that the objective to raise fresh capital up to N600 billion was targeted at settling the outstanding foreign exchange payables and part of the local bank facilities.
The multinational company in 2023 financial year result and accounts declared a net loss of N106 billion, primarily due to the impact of the devaluation of the Naira which resulted in a foreign exchange loss of N153 billion, and higher interest costs on loans and borrowings for capacity expansion.
He stated that despite the company’s best efforts and diligent management, it ended 2023 financial year with operating profit of N45 billion, and ended the year with a net loss of N106 billion, driven mainly by the devaluation of the Naira and higher cost of funds.
“Our retained earnings were equally negatively impacted by the net loss. The board was therefore unable to propose any dividend payment for the 2023 financial year, breaking from the age long tradition of consistent dividend payment,” he said.
Hiemstra noted that the outcome of the rights issue would be the elimination of the naira devaluation risk/huge foreign exchange losses as well as the reduction of the huge interest burden on the company.
He said the board and management of Nigerian Breweries was convinced that the N600 billion rights issue was the best option at this point in time, urging shareholders of the company to authorise the board to undertake a capital restructuring by way of a rights issue.
“The board is convinced that this is the best option at this point in time and therefore strongly recommends that you authorise the board to undertake a capital restructuring by way of a rights issue so that all 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.
“The majority shareholder, Heineken N.V. 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. This again shows the long-term commitment of Heineken N.V. to our company even after more than 77 years.
“The board counts on your support, as always, to enable us jointly take the necessary step that would lead us back to profitability in the not-too-distant future,” he explained.
He noted that consumers and businesses are expected to grapple with the turbulent economic climate for a while, stressing that Nigerian Breweries was committed to maintaining resilience in the face of adversity.
“The board is confident that our company remains in a good position to weather the storm. We will sustain a strong cost management culture and further optimise our operational footprint, keep winning in the market by leveraging our strong portfolio, exciting innovations, and route to consumer. We will keep our people engaged and motivated,” he said.
Hiemstra noted that the company in 2023 subsequently executed the transaction documents with Heineken Beverages (Holdings) Limited (Heineken Beverages) of South Africa for the acquisition of an 80 per cent equity stake in Distell Wines and Spirits Nigeria and the acquisition of 100 per cent of Heineken Beverages' import business in Nigeria.
“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,” he stated.