Nigerian Breweries seeks N15bn short-term funding through Commercial Paper Programme

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Nigerian Breweries Plc on Thursday announced the issuance of a N15bn Commercial Paper (CP), part of the company’s N100 billion commercial paper programme to support its short-term funding.

The company is offering 90-day and 182-day Commercial papers to investors with a view to raising short-term funds for its operations. The 90-day CPs carry effective and discount yields of 11.590 per cent and 11.2680 per cent respectively while the 182-day CPs carry 14.430 per cent and 13.4614 per cent respectively.

Both issuances have been rated Aa by Agusto and AA by Global Credit Rating (GCR).

The Series-1 90-day CPs are expected to mature on Monday July 22, 2019 while the Series-2 182-day CPs will mature on Tuesday, October 22, 2019.

The offers opened Thursday and will close on Thursday, April 18, 2019. The settlement date is Tuesday, April 23, 2019.

The new funding follows a recent decision by the company’s board to pay out the entire net profit of N19.4 billion recorded in 2018 as cash dividend to shareholders for the business year, despite decline in the performance of the company.

The dividend payout for the 2018 financial year represented a decline of 41% from 2017. In 2017, Nigerian Breweries paid out its entire net earnings of N33.01 billion as cash dividend.

Nigerian Breweries net revenue slipped by 5.8% in 2018 to N324bn from N345bn in the previous year. Net profit fell by 41% to N19.4bn, from N33bn in 2017.

The company stated at the time that its low performance in 2018 was adversely impacted by the new higher excise duty rates that came into effect in 2018 as well as other challenges in the operating environment.

The brewing company has in the past used commercial paper funding to complement other sources of working capital, while diversifying its funding sources to include non-bank investors, adding that the programme would improve its ability to periodically access funding at rates mirroring money market and Treasury yields.

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