Shareholders associations in Nigeria have given their nod to plans by Nigerian Breweries Plc to raise N600 billion through Rights Issues on the back of foreign exchange exposures that precipitated a loss of N106 billion for the 2023 financial year.
The company had announced at its pre-AGM briefing held on April 10, 2024, that the funds, when raised, would be used for payments of all overdue foreign exchange debts, eliminate forex exposure, and strengthen the company’s balance sheet and liquidity position.
In separate statements, Boniface Okezie, National Coordinator, Progressive Shareholders Association of Nigeria (PSAN), Bisi Bakare, National Coordinator, Pragmatic Shareholders Association (PSAN), and Moses Igbrude, National Coordinator, Independent Shareholders Association Of Nigeria (ISAN), both gave their backing to the Rights Issue, saying it will help steer the company back to profitability.
In his own statement, Okezie regretted the headwinds that triggered the erosion of shareholders’ funds but expressed satisfaction with plans by the nation’s biggest brewer to return to profitability.
“The Rights Issue is the way to go. Nigerian breweries need to rebuild their shareholders’ funds that were eroded by FX losses. The N600 billion proposed for Right Issues is going to fly as long as the foreign partner commits to take up their right when open,” Okezie said.
He called on Nigerian shareholders to embrace the offer because, according to him, the strategic plans being put in place by the company will lead to a quick return to profitability.
“Nigerian shareholders should take up the offer because Nigerian Breweries will bounce back, I have seen the recovery plans being put in place by the company and I am convinced they will lead to recovery from the loss position of 2023. In addition to those plans, the company has good products and a vast huge market share that will help them recover even more quickly than most people expect,” he added.
He commended Heineken International for demonstrating faith in the Nigerian market, saying while other companies would have considered reconsidering their investments in the Nigerian market, the company is taking the path of increasing its stake.
In her statement, Mrs Bakare, of Pragmatic Shareholders Association, expressed her association’s support for the Rights issue, expressing the optimism that the offer will be over-subscribed at the end of the day.
Although she noted that the Offer by Nigerian Breweries might coincide with the time many Nigerian Banks would be in the market to also shore up their capital in line with a recent directive of the Central Bank of Nigeria (CBN), she expressed the optimism that the market will take up the offer when it opens given the track record of the company for impressive returns.
She commended the majority shareholders of the company, Henieken BV for demonstrating confidence by its offer to take all of its share of the offer and said with such confidence, the company was on a rebound.
“With assurance from Heineken, the majority shareholders of taking up 57% of the offer, that shows Heineken has hope and trust in the activities of the company and that the company will return to profitability soon and investors will start getting returns on their investments. I also believe that the existing Nigerian shareholders will be able to take up the over N250 billion on offer,” she said.
Also in his statement, Moses Igbrude, ISAN Coordinator, said Nigerian shareholders and investors are happy about the Rights Issue, being as he said, the most creative way the company could address the balance sheet challenges that lead to the poor returns during the 2023 business year.
Igbrude said Nigerian Breweries needs the capital injection as a sure way to mitigate against future losses.
“Heineken, as majority shareholder in Nigerian Breweries, believes in Nigeria and has expressed their willingness to take up their right which amounts to 57% of the offer. This is a sign that they are committed to the business and I think they have displayed positive relationships with the minority shareholders,” he stated.
He appealed to Nigerian shareholders to take up their rights as support for the business as a demonstration of support to the business and as a wager for good returns on investment when the company refloats and begins to make profits.
At its pre-AGM briefing, Nigerian Breweries announced some major business recovery plans aimed at returning the business to profitability on the back of the forex-induces loss recorded in 2023.
Besides using capital raised from the proposed Rights Issue to refloat its balance sheet and settle foreign exchange-denominated debts, the company also said it will complete the acquisition of a wines and spirits company, a move that will make the company become a player in all the key alcoholic beverage segments of the Nigerian market.
Distell Wines and Spirits Nigeria Limited, the company to be so acquired, boasts of popular brands such as Amarula cream liqueur, Bain’s whiskey, and a host of other popular wines, spirits, and soda.
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