Some good news coming for shareholders of Champion Breweries and Consolidated Breweries Plc.
The Shareholders of Consolidated Breweries Plc have voted in favour of the board’s proposal to sell 513,000,000 ordinary shares of 50 kobo each (57 per cent) held in Champion Breweries Plc to Raysun Nigeria Limited, a wholly-owned Heineken B V subsidiary. The shareholders gave their nod at an extra-ordinary general meeting (EGM) of Consolidated Breweries Plc in Lagos at the weekend.
Here is the news I find more useful for shareholders of Consolidated Breweries and its coming from the Chairman Prof (Mrs) Oyinade Odutola-Olurin;
“Champion Breweries has recorded losses over the years, and has relied on financing from Consolidated Breweries in the form of intercompany debt. The associated interest burden of the intercompany debts on Champion Breweries has negatively impacted its profitability.
Champion Breweries’ losses, coupled with the high cost of financing Champion Breweries’ operations, have in turn, negatively impacted Consolidated Breweries’ group earnings. Therefore, it is in the best interest of Consolidated Breweries and Champion Breweries for the company to now be owned by Raysun, where Champion Breweries’ financing and restructuring needs can be more adequately met”, she said. She added the sale will further optimise Consolidated Breweries’ operations by reducing excess production capacity it no longer needs for its own brands and directly align Champion Breweries with Heineken, via ownership by Raysun, and thereby assure clear focus on Champion Breweries’ turnaround.
That is where the crux of the sale lies. Reading between the lines I think the deal here for Consolidated is getting back Intercompany Debts that may never have been repaid by Champion Breweries. They also can now expect losses from a loss making division to reduce and start making profits again. There is probably more..but for now that’s what I see from the information I have.
Information from Thisday was used in writing this article.