Following the challenging operating environment that impacted its operation in 2023, Nigerian Breweries Plc is taking a bold move to raise N600 billion fresh capital as part of its strategic recovery plan.
At a meeting with journalists on Wednesday, the leadership of the company rolled out various recovery, acquisition, cost-cutting and sustainability plans to surmount the impacts of current macro-economic headwinds.
Hans Essaadi, Managing Director/CEO of Nigerian Breweries Plc, stated at the pre-AGM event that despite the company’s best efforts and diligent management which ensured that it ended the year with an operating profit of N45 billion, the brewer ended the year with a net loss of N106 billion, driven mainly by the devaluation of the Naira and higher cost of funds.
He said the company’s retained earnings were equally negatively impacted by the net loss, adding that the board was unable to propose any dividend payment for the 2023 financial year, breaking from the age-long tradition of consistent dividend payment.
“The Board has explored different options with a view to improving the Company’s financial position and thereby creating the platform to enable us to return to profitability as soon as possible in line with the Board’s commitment to creating long-term value for our Shareholders.
“The Board has resolved to propose to shareholders for consideration and approval at the AGM, a recapitalisation scheme by way of rights issue. The objective is to raise fresh capital up to N600 billion that would be used to settle the outstanding Fx payables and part of the local bank facilities,” he said.
Essaadi said the outcome 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 noted that the board is convinced that this is the best option at this point in time and therefore strongly recommends undertaking 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.
According to him, 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,” he said.
