Nigerian Breweries Plc has said that the final part of the transaction for the completion of the 80 per cent acquisition of Distell Wines and Spirits Nigeria Limited will be completed in the first half of the year, which is between April and June 2024.
Managing Director/CEO of Nigerian Breweries Plc, Hans Essaadi stated this at the pre-Annual General Meeting press event held at Sheraton hotel, Ikeja, Lagos on Wednesday.
Essaadi said that following the shareholders’ approval at the Extra-ordinary General Meeting in December 2023, the company has subsequently executed the transaction documents with Heineken Beverages (Holdings) Limited of South Africa for the acquisition of an 80 per cent equity stake in Distell Wines and Spirits Nigeria and the acquisition of 100% of Heineken Beverages’ import business in Nigeria.
“The final part of the transaction is being completed at the South Africa end with the expectation that the transaction would be completed in full in the second quarter of this year.
“This is a strategic acquisition that is in furtherance of our beyond beer agenda and which would provide us with a complimentary multi-category portfolio and strengthen our market share in the wider beverages market.
“More importantly, it will help us to future-fit our business and enhance our long-term profitability through the addition of new products in the wines, spirits, and flavoured beverages categories”, he said.
On N600 billion right issue, Essaadi noted that despite the company’s best efforts and diligent management which ensured that it ended the year with an operating profit of N45 billion, the brewer ended the year with a net loss of N106 billion, driven mainly by the devaluation of the Naira and higher cost of funds.
He said the company’s retained earnings were equally negatively impacted by the net loss, adding that the board was unable to propose any dividend payment for the 2023 financial year, breaking from the age-long tradition of consistent dividend payment.
“The Board has explored different options with a view to improving the Company’s financial position and thereby creating the platform to enable us to return to profitability as soon as possible in line with the Board’s commitment to creating long-term value for our Shareholders. The Board has resolved to propose to shareholders for consideration and approval at the AGM, a recapitalisation scheme by way of rights issue. The objective is to raise fresh capital up to N600 billion that would be used to settle the outstanding Fx payables and part of the local bank facilities”, he said.
Essaadi said the outcome would be the elimination of the naira devaluation risk/huge foreign exchange losses as well as the reduction of the huge interest burden on the company.
He noted that the board is convinced that this is the best option at this point in time and therefore strongly recommends undertaking a capital restructuring by way of a rights issue so that all shareholders will have the opportunity to acquire more shares in the company in proportion to their holding, at a price to be determined by the board, taking market conditions into consideration.
“The majority shareholder, Heineken N.V. has indicated its readiness to support the recapitalisation proposal and to take up and pay for its portion of the shares that would be allotted to it. This again shows the long-term commitment of Heineken N.V. to our Company even after more than 77 years”, he said.
On the Nigerian Brewery’s focus on the company’s comprehensive Business Recovery Plan, the Company Secretary, Uaboi Agbebaku acknowledged the challenges that will be faced by the communities in Awo-Omamma in Imo State and Kakuri in Kaduna State due to the suspensions.
He emphasised the company’s commitment to minimizing the impact on its workforce by exploring all feasible alternatives.
According to him, these measures include relocating and redistributing employees to the remaining seven breweries and offering support and severance packages to those that become unavoidably affected.
He said: “Suspension of the activities in those two breweries will not stop us from giving back to the society. We will build an oil palm mill in Awo-Omamma and also support Kakuri with another project”.
