Guinness Nigeria PLC plans to raise about N40 billion from its shareholders as part of strategic plan to deepen its balance sheet and provide long-term financial support for its business.
A notification issued by the company indicates that the Board of Directors of Guinness Nigeria has fixed an Extraordinary General Meeting (EGM) for January 24, next year to place the new capital raising plan before the shareholders and secure the shareholders’ resolutions to proceed with the fund raising.
While the details of the capital raising are still sketchy, Guinness Nigeria plans to undertake a rights issue to raise up to N40 billion, limiting the new capital issue to predetermined subsisting shareholders of the company. The new shares on offer will be proportionately allotted to the existing shareholders based on their shareholdings as at a particular date.
According to Guinness Nigeria, the rights issue will allow the company to optimise its balance sheet while improving its financial and operational flexibility.
Guinness Nigeria closed the last trading session at the Nigerian Stock Exchange (NSE) at N88.73. It has traded between a high of N126.99 and a low of N71.82 in the past 12 months.
The new capital raising is, however, still subject to approval of the Securities and Exchange Commission (SEC) and NSE.
The proposed capital issue will provide another window for Diageo PLC, the parent company and majority shareholder of Guinness Nigeria PLC, to inject capital into the Nigerian subsidiary after the multinational backed down from its earlier proposal to acquire additional equity shares in Guinness Nigeria.
Diageo recently withdrew its plan to acquire more shares of up to 15.7 per cent in Guinness Nigeria, citing the challenging market conditions in Nigeria. It had in September, last year announced that it was considering acquiring 15.7 per cent equity stake in Guinness Nigeria through its wholly owned subsidiary, Guinness Overseas Limited.
Guinness Nigeria had recorded net loss of N2 billion in the immediate past year as the brewing multinational struggled with declining sales amidst dwindling consumer spending and tough macroeconomic situation.
Key extracts of the audited report and accounts of Guinness Nigeria for the year ended June 30, 2016 released yesterday showed that turnover dropped by 14 per cent from N118.5 billion last year to N101.97 billion in 2016.
Operating profit declined by 72 per cent from N15.67 billion to N4.42 billion. The company recorded a pre-tax loss of N2.35 billion in 2016 as against profit before tax of N10.8 billion in 2015. After taxes, net loss stood at N2.02 billion in 2016 compared with net profit of N7.790 billion in 2015.