Int’l Breweries closes N165bn rights issue

beer

International Breweries Plc (“IB PLC”) announced on Sunday that its N165bn rights issue will close on Tuesday 24th December 2019.

In a statement from the brewing company, it said that it has received the express approval from its shareholders and relevant agencies of government including the Security and Exchange Commission.

The application list for its rights issue was first launched on 5th December 2019. The exercise will see Anheuser-Busch InBev, the majority shareholder in IB Plc invest an additional N124bn ($341m) in the Nigerian subsidiary.

The statement said that IB Plc was offering 18,266,206,614 units of ordinary shares of 50 kobo each at N9 per share.

According to the statement, for every eight shares held by shareholders whose names appear in the register of members of the company as of November 6, 2019, an offer of 17 ordinary shares is made.

“Through the rights issue, the company’s capital structure is expected to be remarkably changed as long-term debt is replaced with equity, thereby easing the burden of interest payments, increasing management’s flexibility as well as removing volatility in earnings, the company said in the statement signed by its Company Secretary/Legal Counsel, Muyiwa Ayojimi.

The capital raising comes on the heels of growing debt at the brewing company as it seeks to grow its presence in the Nigerian beer market and take market share from its rivals, Nigerian Breweries Plc and Guinness Nigeria Plc. The company recorded a net loss of N4bn in fiscal year 2018 and the losses have continued into the first nine months of 2019, recording N16.4bn in net loss.

“This offer, which is currently the largest rights issue in Nigeria, is to have its full impact reflected in 2020 while presenting a positive outlook for dividends for shareholders in 2021.”

The company said with a fair post rights issue valuation range of N471bn to N504bn, the rights issue was most likely to become the seventh most capitalised company on the Nigerian Stock Exchange.

It added that the parent company, ABInBev, by the rights issue, had a long-term outlook for Nigeria.

“ABInBev has invested in capacity expansion, about N90bn ($250m) in the Sagamu plant and will be injecting N124bn ($341m) via the rights issue,” the statement added.

AB InBev holds the majority equity stake of 75.1% in International Breweries Plc. With the pre-allotment ratio, about 13.72 billion ordinary shares of 50 kobo each have been pre-allotted to AB Inbev.

International Breweries Plc has emerged as the number two brewer in Nigeria, with control of 25% of the beer market despite challenging market conditions, including weak macroeconomics, higher excise tax regime and a competitive environment.

According to the statement, the new capacity stream and ramped up investments in route to market, will enable the firm to consolidate on its leadership and continue to take market share.

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