Guinness Nigeria Plc, on Tuesday received approval from its shareholders for a proposed N40bn ($127m) rights issue.
At an Extra-Ordinary General Meeting (EGM) held in Lagos on Tuesday, Guinness Nigeria’s shareholders approved the request.
Guinness Nigeria board chairman, Mr. Babatunde Savage, said the shareholders’ approval would enable the company raise up to N40bn as fresh cash injection into the business operations.
“We believe this rights issue will positively impact on the financial performance of Guinness Nigeria and help mitigate the impact of increasing finance cost in what continues to be a challenging economic environment in Nigeria”.
At the end of 2016, Guinness Nigeria, a subsidiary of Diageo Plc, announced its intention to seek a rights issue as part of plans to optimize its balance sheet and improve its financial flexibility.
The brewer had recorded a N2bn net loss for the full-year ending 30th June 2016, its first loss in 30 years. Similarly, it recorded a N2.1bn net loss in its first quarter results for the 2016/2017 financial year. In addition, the company took a $95m loan from Diageo Plc its parent company to assist it with foreign exchange scarcity that was impacting its ability to purchase raw materials from abroad. The company had blamed its poor financial performance on macroeconomic challenges in the country, the effect of government’s FX policy and naira devaluation.
Speaking at the EGM on Tuesday, Peter Ndegwa, Managing Director, Guinness Nigeria plc, said he is optimistic about the company’s future.
“Guinness Nigeria is a company with excellent fundamentals and we have the right strategy and the right people to grow our business for the future,” he said.
“This rights issue in combination with our productivity and cost optimization drive will help provide the fuel to continue to build this business for Nigeria and Nigerians.”
Guinness Nigeria is expected to release its half-year results (6-months) ended 31st December 2016 this week.