International Breweries has received the green light from the Securities and Exchange Commission (SEC) for its proposed rights issue, aiming to raise N588 billion. The company announced this approval in a notice to the Nigerian Exchange Limited.
The rights issue will involve offering 161,172,395,100 ordinary shares at 2 Kobo each, priced at N3.65 per share. Shareholders can subscribe to six new ordinary shares for every existing ordinary share held.
Details of the Rights Issue
In its statement, International Breweries outlined the specifics of the rights issue: “International Breweries Plc is pleased to notify its esteemed shareholders, stakeholders, Nigerian Exchange Limited, and the general public, that the company has obtained approval from the Securities Exchange Commission to offer to the shareholders the proposed rights issue of 161,172,395,100 ordinary shares of 2 Kobo each at N3.65 per share, on the basis of six new ordinary shares for every one existing ordinary share held.”
The qualification date for the rights issue was May 2, 2024, with the application list opening on May 21, 2024, and set to close on June 10, 2024. The rights circular will be distributed to shareholders by the company’s registrars, and application forms will be available on the company’s and the registrars’ websites.
The company urged shareholders to contact their stockbrokers and financial advisers for more details on the offer. This notice was signed by the Company Secretary/Legal Counsel, Dr. (Mrs.) Marian Reginald-Ukwuoma.
Financial Challenges and Strategic Measures
International Breweries has been grappling with significant financial losses over the past five years. Despite revenue growth, the company reported an unaudited pre-tax loss of N87.64 billion for 2023, up from a N26.84 billion pre-tax loss in 2022. As of December 31, 2023, the company’s loan portfolio was N374.339 billion, including a $424 million loan from Citi Bank, with an outstanding balance of $389.08 million.
To address these financial challenges, International Breweries has initiated a strategic plan. At its Extraordinary General Meeting on April 15, 2024, shareholders approved a convertible loan of $379.9 million from AB InBev Nigeria Holdings BV to repay the Citi Bank loan. The funds from this shareholder loan will also be used for any shares subscribed to by AB InBev Nigeria Holdings BV in the company’s rights issue.
Company Performance
In 2023, International Breweries saw a 21% increase in turnover, reaching N264.28 billion, up from N218.65 billion in 2022. The company’s Q4 2023 revenue rose to N80.50 billion, a 38% year-on-year increase from N52.22 billion in Q4 2022.
However, the company faced significant impacts from the Naira devaluation in 2023, leading to a net foreign exchange loss of N72.47 billion, a 437.6% increase from N13.47 billion in 2022. Additionally, interest expenses on the company’s borrowings surged to N24.75 billion in FY 2023, up 247% from N7.14 billion in FY 2022.
To mitigate the risk of exchange rate fluctuations on its outstanding loan balance with Citi Bank, International Breweries has employed non-deliverable forward contracts to manage interest and principal payments.
Bottom Line
The approval of the rights issue by the SEC is a crucial step for International Breweries as it seeks to navigate its financial challenges and capitalize on growth opportunities. Shareholders and potential investors are encouraged to participate in the rights issue to support the company’s strategic initiatives.
