Shareholders of Nigerian Breweries Plc have approved a N600 billion capital raise through a rights issue to reduce its debt burden.
The decision was taken at the 78th annual general meeting (AGM) of the company on Friday in Lagos.
On April 3, Nigerian Breweries said the board of directors will seek the approval of the company’s shareholders to raise N600 billion through rights issues during its annual general meeting.
According to the company, the proceeds from the rights issue will help reduce its debt burden, resulting in a healthier balance sheet.
This followed a net loss of N106 billion in 2023, largely induced by the impact of the devaluation of the naira on its foreign exchange transactions.
On February 13, the company announced an upward review of the prices of some products in its stock-keeping units (SKUs) to mitigate the impact of the rising cost of input.
However, speaking at the AGM, Siep Hiemstra, Nigerian Breweries interim chairman, board of directors, said the decision to seek approval for the capital raise aligns with the company’s commitment to improving its financial position.
Hiemstra said the company’s goal is to return its business to profitability while creating value for shareholders.
According to the chairman, the aim of raising new capital totalling N600 billion is to allow Nigerian Breweries to clear their existing foreign exchange payables and a portion of their local bank facilities.
This, he said, would mitigate the risk of naira devaluation or foreign exchange losses and reduce the huge interest burden on the company.
Hiemstra said the majority shareholders, Heineken, have shown their willingness to support the recapitalisation exercise by taking up and paying for the portion of the shares allotted to it.
“Following the challenging year 2023 and the present volatility of the Nigerian business environment, we are focused on our strategic recovery plan backed by parent company Heineken,” the chairman said.
“Prioritising efficiency and agility in all areas of operations; and maintaining market leadership through its rich portfolio of brands. We will continue to demonstrate resilience to deliver value for shareholders and all stakeholders.”
Also speaking, Hans Essaadi, managing director and chief executive officer (CEO) of Nigerian Breweries Plc, expressed gratitude to the shareholders for their support, emphasising the company’s dedication to providing sustained growth for its shareholders, despite the current economic difficulties and obstacles.
“While we cannot influence the external environment, we are committed to maintaining resilience in the face of adversity. We are confident that the company will remain in a good position to weather the storm,” Essaadi said.
Essaadi said the company will sustain a strong cost management culture, optimise operational footprint, and leverage its strong brand portfolio, exciting innovations, and route to consumers to win in the market.