Nigerian Breweries is seeking its shareholders approval to raise up to N600 billion capital through a Rights Issue. The decision was made during its specially convened Board of Directors meeting held on April 3, 2024.
This information was contained in a corporate disclosure observed by Nairametrics.
According to the disclosure signed by Uaboi Agbebaku, the Company Secretary, the Board of Directors will make the recommendation to the company’s shareholders during its AGM scheduled for April 26, 2024.
According to the company statement, the proposed Rights Issue, subject to regulatory clearance, is anticipated to alleviate the substantial debt burden, resulting in a healthier balance sheet for Nigerian Breweries Plc.
- The statement read, “Due to the negative impact of the devaluation of the naira and the high cost of funds on the Company’s capital structure, especially on the Company’s debts, the proceeds from the Rights Issue will help to reduce the huge debt burden arising thereby leading to a healthier balance sheet. Coupled with ongoing cost savings and other operational efficiency efforts, the Board is optimistic about steering the Company back to the path of sustainable profitability in the near future.”
In addition to the capital raise, Nigerian Breweries’ Board is set to propose an increase in the company’s share capital to accommodate the issuance of new shares under the Rights Issue.
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What you should know
Nigerian Breweries is in a dire financial condition, with the group recording a net loss of N106.3 billion in 2023, a significant decline from the net profit of N13.2 billion posted in 2022.
Thus, it led to retained losses of N26.3 billion, as its retained earnings of N90.8 billion from 2022 had been wiped out.
With an equity multiplier of 12.58, Nigerian Breweries displays a high level of reliance on debts, with its current liabilities even reaching up to N584.5 billion.
For Nigerian Breweries, the need to raise capital is quite urgent as the company is currently out leveraged.
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