Nigeria: Nigerian Breweries launches N599 bln rights issue

Nigerian Breweries (NB) Plc has opened acceptance list for its N599.1 billion rights issue, in the biggest recapitalisation programme by existing shareholders of a company, The Nation Newspaper reported on September 4.

NB is offering 22.61 billion ordinary shares of 50 kobo each to existing shareholders at N26.50 per share. The shares have been pre-allotted on the basis of 11 new ordinary shares for every five ordinary shares held as at the close of business on Friday, July 12, 2024.

Acceptance list for the rights issue opened on Monday, September 02, 2024 and will close on Friday, October 11, 2024.

The board of the company on September 3 said the opening of the rights issue followed approval by the Securities and Exchange Commission (SEC).

Netherland-based Heineken N.V, the majority investor in NB, is expected to invest not less than N341 billion in NB through the rights issue that pre-allocated about 12.9 billion ordinary shares to the multinational.

Market sources had indicated that Heineken N.V., which has shown strong appetite for the Nigerian market, could scale up its investments to more than N400 billion.

Heineken’s representative, Mr Sijbe Hiemstra, had said the multinational stands ready to provide an initial commitment of up to N342 billion in new equity injection into the Nigerian subsidiary.

At the annual general meeting of NB held at the Muson Centre, Onikan, Lagos, shareholders had mandated the board to float a N600 billion rights issue as a means of capital restructuring aimed at boosting the company’s balance sheet.

Heineken, which holds 57 per cent majority equity stake in NB, stated that it was ready to pick its allotted rights. Market pundits said the provision on additional allotment allows Heineken to buy additional shares, citing the multinational’s history of increase in equity stakes in NB through secondary acquisitions.

Hiemstra, former Regional President for Africa and Middle East for Heineken, said the majority shareholder, Heineken has already indicated its readiness to support the recapitalisation exercise by taking up and paying for the portion of the shares allotted to it. Rights issue is traditionally pre-allotted on the basis of existing shareholdings.

Speaking at the annual general meeting, Hiemstra explained that the decision to seek approval for the capital raising was is in line with the company’s commitment to improving its financial position and returning the business to profitability while creating value for the shareholders.

According to him, the objective of raising fresh capital to the tune of N600 billion is to enable the company settle its outstanding foreign exchange (forex) payables as well as part of the local bank facilities.

He said the balance sheet restructuring would lead to the elimination of the naira devaluation risk or foreign exchange losses as well as the reduction of huge interest burden on the company.

“Following the challenging year 2023, and the present volatility of the Nigerian business environment, we are focused on our strategic recovery plan backed by parent company Heineken, prioritising efficiency and agility in all areas of operations; and maintaining market leadership through its rich portfolio of brands. We will continue to demonstrate resilience to deliver value for shareholders and all stakeholders,” Hiemstra said.

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