Nigerian Breweries to Raise N600 Billion to Address Financial Issues

Nigeria - The biggest brewer in Nigeria, Nigerian Breweries Plc, has announced intentions to raise as much as N600 billion (US$450 million) through a rights issue in order to solve issues brought on by the depreciation of the Naira and excessive borrowing rates. In a notice issued to the Nigerian Exchange Ltd. (NGX) in Lagos, Uaboi Agbebaku, the Company Secretary of Nigerian Breweries, made this revelation.

Agbebaku disclosed that the decision was made during a Tuesday, specifically called meeting of the Board of Directors.

Strengthening the company's balance sheet and reducing the debt load—which is shown by a net loss of N106 billion (US$450 million) in 2023—are the main goals of the rights issuance.

Agbebaku went on to say that the money raised from the rights offering will go a long way toward lowering the debt load and, in the end, creating a stronger balance sheet.

The next annual general meeting is set for April 26, and the Board has decided to recommend the rights issue to shareholders at that gathering.

In order to accommodate the additional shares that will be distributed under the rights issue, an increase in the company's share capital will also be suggested.

The rights dispute, according to Nigerian Breweries Plc's Managing Director/Chief Executive Officer Hans Essaadi, is the first phase in the company's strategic recovery plan for ongoing operations and future expansion.

The company's net profit was under pressure, according to Essaadi, despite considerable mitigating steps. These causes included high interest rates, difficulty of access to foreign cash, and the recent acceleration of the Naira depreciation.

In addition to stressing the need of quickly addressing the financial sheet to guarantee sustainability, Essaadi said that resolving the rights problem will allow Nigerian Breweries to accomplish its recovery plan's strategic goals.

He continued by saying that all shareholders will have a special chance to grow their shares thanks to the rights offering.

"This procedure is a component of the business's recuperation strategy to maintain value for its stakeholders and bring the enterprise back to profitability," stated Essaadi.

"We are still fully dedicated to using our robust supply chain and well-executed route to market strategy to positively impact our host communities and customers."

Following its first profit in over 13 years in 2023, the company implemented risk-reduction strategies that included rigorous cost control, a favorable pricing mix, effective sales operations, and other efficiency initiatives.

The corporation recently announced intentions to increase beer prices, which will be the third price increase for Nigerian customers in less than a year.

The necessity to "mitigate the impact" and "continue rising input cost" were the company's justifications for the price hike.