Guinness Nigeria commences N40 billion rights issue to reduce debt level

05 Jul 2017
Financial Nigeria

Summary

In October last year, Guinness Nigeria reported its first full-year loss in over 30 years as the country’s deteriorating economic conditions reduced demand for the company’s products.

L-R: Non-Executive Director, Prof Joe Irukwu; Managing Director, Mr. Peter Ndegwa; Non-Executive Director, Ambassador Sunday Dogonyaro; and Non-Executive Director, Ms Ngozi Edozien; all of Guinness Nigeria Plc, during the signing ceremony of the company’s N40bn rights issue in Lagos on Tuesday July 4, 2017

Guinness Nigeria commenced its N40 billion rights issue yesterday to raise funds to reduce the company’s financing costs, according to a statement by the firm sent to Financial Nigeria on Tuesday.

In January this year, Guinness Nigeria – which is 54 percent owned by the British drinks giant, Diageo – obtained shareholder approval to raise funds from existing shareholders. The company said it planned to use the additional funds to deleverage its balance sheet, finance working capital needs, and expand operations.

“Our expectation is that funds raised will help mitigate the impact of increasing finance costs, optimize our balance sheet and improve the company's financial flexibility,” Peter Ndegwa, Guinness Nigeria CEO.

In October last year, Guinness Nigeria reported its first full-year loss (2016) in over 30 years as the country’s deteriorating economic conditions reduced demand for the company’s products. The company said after-tax loss stood at N2.01 billion as against an after-tax profit of N7.79 billion a year earlier. Revenues fell by 14 percent to N101.97 billion compared with N118.5 billion a year earlier.

Guinness Nigeria said its rights issue has received the approval of the Securities and Exchange Commission and the Nigerian Stock Exchange.

The rights issue will offer 684,494,631 ordinary shares of 50 kobo each at N58 per share on the basis of 5 new ordinary share for every 11 ordinary share held by shareholders.

Founded in 1962, Guinness Nigeria is the country’s second largest brewer after Heineken-owned Nigerian Breweries. Guinness Nigeria’s stock traded at N64.54 per share at the Lagos bourse on Wednesday, down 4.99 percent from the previous day’s close.


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