The Managing Director / Chief Executive Officer, of Nigerian Breweries Plc, Hans Essaadi, has assured shareholders that the company is poised for future profitability and dividend payment, citing its efforts to eliminate historical debt and reduce interest burden through its ongoing rights issue.
Just as shareholders are urged to pick their rights issue. Hans Essaadi disclose this on tuesday while addressing stockbrokers and financial journalists at its facts behind the rights issue presentation at the Nigerian Exchange Limited: (NGX) in Lagos.
The company is raising N599.1 billion by offering 22.6 billion ordinary shares at 50 kobo each, priced at N26.50 per share, allowing existing shareholders to buy 11 new shares for every five held.
The offer opens on Monday 2nd September and closes on Friday 11th October 2024 for shareholders who held the company share as at Friday 12th July 2024.
Commenting on the rights issue, the Company Secretary / legal adviser, Mr. Uaboi Agbebaku, stated that the proceeds will be used to clear the company’s payables, including N328 billion in foreign exchange debts and N263 billion in repayments of local obligations.
Agbebaku stressed that the move is aimed at eliminating foreign exchange losses from the company’s balance sheet and reducing its interest burden on local debts.
“Our foreign exchange losses are substantial, and clearing these obligations will stabilize our profit and loss accounts. We are also working to reduce local bank debts. The impact of that also is that it will eventually reduce the interest burden that we are carrying, which has been a significant financial strain,” Agbebaku stated.
He, however, expressed optimism stressing that “We have completely future-proofed our business. Some measures taken by the new administration in the country are very painful, but the belief is that we would begin to see positive outcomes in the mid-long term. The moment we see inflation, interest rates and other economic indicators become better, I can assure you that the results will be better.”
On the company’s outlook, Essaadi noted, “We believe that mid-long term, the measures taken by the new administration will bear fruit. We see inflation coming down a little bit, and maybe soon, interest rates will come down.”
Regarding local sourcing of raw materials, Essaadi explained, “We’re working on backward integration, but there are key ingredients we still need to import, like malted barley. However, we’ve made progress with sorghum, a locally produced raw material used in our lager beer.”
On managing foreign exchange risks, Essaadi said, “We’re looking into financial instruments, but they’re still relatively expensive. Our focus is on eliminating historical debt and limiting our foreign exchange needs.”
Essaadi revealed that Heineken, the parent company, holding over 67 per cent of its equity had suspended the interest they charged on their foreign loan to enable the company to meet up with the financial obligations.
“Despite economic pressures, he reiterated the company’s commitment. “We have been in this market for nearly 80 years and weathered many storms. This rights issue is essential to stabilizing our balance sheet and ensuring long-term growth,” he said.
He noted that the company had expanded its portfolio with the acquisition of Distell Nigeria, marking its entry into the wine, spirits, and ready-to-drink segments. This he believed would further improve profitability and ensure a strong future presence in the Nigerian market.
“We’re ready when demand in the market comes back. We have completely future-proofed our business,” Essaadi said, emphasizing the company’s preparedness for increased market demand.
