Guinness Nigeria Plc says its N40 billion rights issue being floated will optimise the company’s balance sheet for future growth.
Mr Peter Ndegwa, the Guinness Managing Director, made this known at the company’s ‘facts behind the issue’ held at the Nigerian Stock Exchange (NSE) on Tuesday in Lagos.
Ndegwa said that the rights issue was being floated to deleverage the company’s balance sheet and reduce finance costs.
He said that the net proceeds of the rights issue would be used to repay a significant portion of the related party loan and some of the outstanding obligations to financial institutions.
The managing director said that the company had obtained a loan from Diageo in 2016 to manage foreign exchange-related obligations.
Ndegwa said that the company, between 2015 and 2016, obtained loan facilities from various financial institutions to fund working capital requirements and business expansion operations.
“This rights issue will allow the company to deliver on its strategic objectives and give all our shareholders a unique opportunity to increase their shareholding in the company.
“Our expectation is that funds raised will help to mitigate the impact of increasing finance costs, optimise our balance sheet and improve the company’s financial flexibility,” he said.
Also, Mr Babatunde Savage, the company’s Chairman, said that the process was part of the company’s long-term plans to continue to invest and return to profitability.
“We have been in Nigeria for 67 years and, while it has been challenging in recent times for many Nigerian businesses, we remain committed to this market as evidenced by our decision to offer this rights issue.
“We are grateful for the support that we have received from our shareholders and various other stakeholders up to this point,” Savage said.
He said that Diageo had indicated full commitment to the success of the rights issue.
In his remarks, Mr Ronald Plumridge, the Finance and Strategy Director, said that the major focus of the company remained cost of production reduction.
Plumridge said that the company had reviewed distribution strategies to ensure operational efficiency.
The News Agency of Nigeria (NAN) reports that the company is floating a rights issue of 684.49 million shares of 50k each at N58 per share on the basis of five new ordinary shares for every 11 already held.
The company planned to raise N39.70 billion by way of rights from its existing shareholders.
The offer which opened on July 24 would close on Aug. 30 with Stanbic IBTC Capital acting as the issuing house. (NAN)
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