*Uaboi Agbebaku, Company Secretary at Nigerian Breweries Plc, acknowledges the company鈥檚 Forex losses are 鈥榮ubstantial鈥�, but it is set to clear these obligations to stabilise its profit and loss accounts, stating the proceeds from the Rights Issue will be used to clear the company鈥檚 payables, including N328 billion Forex debts and N263 billion in repayments of local obligations

Isola Moses | 绿帽献妻

The Management of Nigerian Breweries Plc is intensifying efforts at eliminating the company鈥檚 Foreign Exchange (Forex) losses from its balance sheet while reducing interest burden on local debts.

The company at a market forum Monday, September 16, 2024, disclosed that it would raise N599.1 billion through a Rights Issue on the Nigerian Exchange Limited (NGX) to address its pressing financial obligations.

The company is offering 22.6 billion Ordinary Shares at 50 Kobo each, priced at N26.50 per share, allowing shareholders to buy 11 new shares for every five held, according to report.

The Nigerian Breweries is said to have faced a challenging financial period, posting a Loss After Tax (LAT) of N85.3 billion for the first half of 2024.

This development was mainly attributed to rising inflation, Forex costs, operating expenses, and broader economic headwinds in the country.

Speaking to capital market community at company鈥檚 鈥淔acts Behind the Rights Issue鈥� presentation in Lagos, Mr. Uaboi Agbebaku, Company Secretary, Nigerian Breweries Plc, however, affirmed that the proceeds from the offering would be used to clear the company鈥檚 payables, including N328 billion in Foreign Exchange debts, as well as N263 billion in repayments of local obligations.

Agbebaku explained the move is aimed at eliminating Forex losses from the company鈥檚 balance sheet and reducing its interest burden on local debts in view of Nigeria鈥檚 26 percent Monetary Policy Rate (MPR).

The Company Secretary reportedly stated: 鈥淥ur FX losses are substantial, and clearing these obligations will stabilise our profit and loss accounts. We are also working to reduce local bank debts.

鈥淭he impact of that also is that it will eventually reduce the interest burden that we are carrying, which has been a significant financial strain,鈥� Agbebaku stated.

Shareholders present at the capital market forum, therefore, urged the company to mitigate future Forex risks by exploring forward-looking strategies, including backward integration and increased investment in Research and Development (R&D) to reduce dependence on imported raw materials.

In his remarks, Hans Essaadi, Managing Director of NB Plc, noted that while the company was ramping up efforts in areas possible to return to profitability, Nigeria鈥檚 volatility and the broader economic challenges were impacting its performance, report said.

Essaadi yet expressed optimism, as he stated: 鈥淲e have completely future-proofed our business.

鈥淪ome measures taken by the new administration in the country are very painful, but the belief is that we would begin to see positive outcomes in the mid-long term.

鈥淭he moment we see inflation, interest rates and other economic indicators become better, I can assure you that the results will be better.鈥�

The Managing Director of NB Plc disclosed that Heineken, the parent company holding over 67 percent of its equity, has suspended the interest they charged on their foreign loan to enable the company to meet up with the financial obligations.

According to him, despite economic pressures, the company is committed to returning 聽to profitability.

Essaadi added: 鈥淲e have been in this market for nearly 80 years and weathered many storms.

鈥淭his Rights Issue is essential to stabilising our balance sheet and ensuring long-term growth.鈥�

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