Nigerian Breweries sets up new N100bn “Commercial Paper” programme, accepts new loan facility

Nigerian Breweries Plc (“NB”), announced on Monday the establishment of a new N100bn Commercial Paper (“CP”) programme.

In a statement released by the company to the Nigeria Stock Exchange (NSE), it said the new Commercial Paper could be issued in tranches or series of such amounts and at such dates, discounted values, coupon or interest rate, within such maturity periods and upon such other terms and conditions as may be determined by the company.

The establishment of a N100bn Commercial Paper by NB marks the second time the brewing company would set-up a “CP” of this magnitude. At the height of the Nigerian recession in 2015, the company established a N100bn Commercial Paper programme, which at the time was reported to be the largest Commercial Paper programme to be established in Nigeria by a (non-financial institution) corporate issuer since the 2009 guidelines on Commercial Paper from the Central Bank of Nigeria (CBN).

The company said at the time that the “CP” would complement other sources of working capital, while diversifying its funding sources to include non-bank investors. It added that the programme would improve its ability to periodically access funding at rates mirroring money market and Treasury yields.

The company also announced the acceptance of a N10bn Long Term Loan (7 years) from the Bank of Industry Limited (BoI) as well as a working capital of N5bn loan (3 ½ years). The brewing company said that the long term loan will be utilized to finance the procurement of plant and machinery for the expansion of the company’s breweries.

All of these come at a time of increased competition in the Nigerian brewing industry. The three major brewing companies in the country, which are subsidiaries of global brewing giants, have been ramping up their investments in the country as competition intensifies. International Breweries plc, the Nigerian subsidiary of the world’s largest brewing company, Anheuser-Busch InBev at the end of last year consolidated its three breweries in Nigeria under one roof. This was as it neared the completion of yet another brewery, said to be the second largest in Africa. The just completed FIFA World Cup tournament in Russia saw the country’s three largest brewers – Nigerian Breweries Plc, Guinness Nigeria Plc and International Breweries Plc increase their marketing spend to attract new drinkers and grow market share.

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