Guardian Nigeria
International Breweries Plc says it is initiating a rights issue to settle a dollar-denominated loan, which has been exerting downward pressure on its earnings.
Mr Carlos Coutino, the Managing Director of International Breweries Nigeria, revealed this during the presentation of “Facts Behind The Rights Issue” to capital market stakeholders at the Nigerian Exchange Ltd. (NGX) on Thursday in Lagos.
The News Agency of Nigeria (NAN) reports that International Breweries recently obtained approval from the Securities Exchange Commission (SEC) to proceed with its proposed rights issue to existing shareholders, as conveyed in a notice to the NGX.
The rights issue will offer 161,172,395,100 ordinary shares at two Kobo each, priced at N3.65 per share valued at N588,279 billion.
The company noted that its existing shareholders would be able to subscribe based on six new ordinary shares for every existing ordinary share held.
Coutino said that the debt settlement through the rights issue would reduce the impact foreign exchange volatility had on the company’s earnings.
This, he said, would therefore also reduce foreign exchange exposure and lead to improvements in cash flow as well as support the company’s return to profitability.
According to him, the rights issue will address the short-term liquidity support through financing working capital.
The managing director noted that in spite of the challenges in Nigeria’s operating environment, which affected the company’s financial performance in 2023, the country remained a compelling and attractive nation.
“Nigeria will be the third most populous country of the world by 2050, according to the World Bank population data sheet.
“Nigeria has the second largest beer market in Africa with compelling outlook for beer consumption growth, underpinned by favourable population and median age.
In his presentation, Mr David Tomlinson, Finance Director, Nigerian Breweries, said the company had significantly improved its working capital and cash flow since 2019.
Tomlinson stated that the foremost Nigeria brewer had delivered consistent improvement to its gross margin, while its revenue grew from N131.351 billion in 2019 to N218.650 billion in the year 2023 financial year.
He explained that the company’s revenue growth mainly was driven by strong volume performance, positive brand mix and revenue management initiatives
“Our disciplined revenue management and cost optimisation have delivered consistent improvement to our gross margin.
“The rights issue is an opportunity for shareholders to continue to invest in the success story of International Breweries alongside the world’s largest brewer AB InBev Group, its parent company.
“I encourage all our shareholders to take advantage of the opportunity,” he said.
Commenting, the Acting Chief Executive Officer of the NGX, Mr Jude Chiemeka, commended the Board and Management of International Breweries for leveraging the NGX platform to increase its engagement with the capital market community.
Chiemeka said that the Exchange encourages all issuers’ interaction with market participants via the Fact Behind The Rights Issue event.
He said the Exchange is committed to helping issuers derive great value from their interactions with the market.
“By positioning ourselves as the African Exchange of choice, we will continue to adopt rules aimed at improving the corporate governance of our listed firms.
“We will also offer products and services that are tailored to the needs of investors in a fair and orderly market.
“With the fast-changing macroeconomic environment in Nigeria and globally, we encourage International Breweries to continue to strive for sustainability.
“This is by adhering to higher standards of corporate governance, deeper social impact, higher regulatory compliance, and greater returns for shareholders, the NGX boss said.
NAN reports that International Breweries has been facing escalating losses over the past five years and was unable to pay dividends to its shareholders in 2023.
Despite revenue growth, the company recorded an unaudited pre-tax loss of N87.64 billion for 2023, a significant increase from the N26.84 billion pre-tax loss reported in the 2022 financial year.
As of Dec. 31, 2023, International Breweries’ loan portfolio stood at N374.339 billion.
Notably, a 424 million dollar loan from Citi Bank in 2018, with an outstanding balance of 389.08 million dollars in 2022, while 309 million dollars was rolled over in 2021 for an additional three-year period.
International Breweries Plc was founded as a limited liability company in 1972, in Ilesha, Osun State.
It was subsequently re-registered as a public limited liability company on April 26, 1994 and listed on the Nigerian Stock Exchange in 1995.
Its core business activities include the brewery, packaging, and marketing of alcoholic and non-alcoholic beverages, such as Budweiser, Trophy Larger, Eagle Larger, Eagle Stout, Hero Larger, Beta Malt, and Grand Malt, amongst others.
