One of Nigeria’s leading Quick Service Restaurant Chain (QSR), Tantalizers Plc released its 2017 earnings on Wednesday. The company reported a System Revenue of N3.7 billion up from 2.7% from the N3.6 billion in systems revenue reported a year earlier.
The company had in a press release last year estimated a System Revenue of over N4 billion by the end of 2017. However, the company was boosted as it posted its first profits in over 5 years, reporting a profit after tax of N443 million. The latest profits helped the company avoid a technical insolvency as it was just N300 million away from negative equity.
How did it avoid insolvency?
Nairametrics reported last year that the company will need to either raise fresh equity or sell down some of its assets if it was to avoid a takeover by its lenders. It did just this towards the end of 2017, raising about N1.49 billion in asset sales.
The profit made from this sale (about N1 billion) helped it to avoid an imminent insolvency. Actual cash received was N1.1 billion from the sale of the assets. The company also secured a loan write back amounting to N600million. It did not explain how it wrote back these loans but a look at its notes to accounts may provide some insight.
Loan writebacks
Tantalizers loan book reduced by about N1.1 billion in the period under review. The company reported that it repaid loans of about N862 million and serviced the interest of about N269 million only. However, from its notes to account, loans to Citibank/IFC amounting to N863 million was wiped out. Loans from the likes of Ecobank, Skye Bank however increased. It appears though, that the loan write-back may have been loans from Citibank/IFC suggesting that the development bank wrote off the loans for Tantalizers.
What next
With revenues still stunted and competition seemingly on the increase, it appears Tantalizers may continue to sell down assets in a bid to fix its balance sheet. Raising capital is also inevitable and this will likely only be achieved via a strategic investor or a takeover of the company.
