As foreign exchange debt continues to mount for Nigeria’s foremost brewing company, the Nigerian Breweries Plc, the Nigerian Exchange Limited (NGX), has approved a rights Issue of N600 billion to tackle the problem.

The NBL Plc, the largest brewer in the country, plans to offer 22,607,491,232 ordinary shares at N26.50 per share, providing existing shareholders with eleven new ordinary shares for every five shares held as of July 12, 2024.

The company’s decision to urgently raise funds through a rights issue is for clearing a N500 billion Foreign Exchange debt.

According to Hans Essaadi, managing Director and Chief Executive Officer of Nigerian Breweries Plc, the tough business landscape, characterised by double-digit inflation rates, naira devaluation, FX challenges, and diminished consumer spending, has taken its toll on many businesses, including NB Plc.

Nigerian Breweries has struggled with FX debt and other financial challenges, resulting in significant losses.

The company’s half-year financial results for the period ending June 30, 2024, showed a loss after tax (LAT) of N85.199 billion, a sharp rise from N47.599 billion in the same period the previous year—a 79% increase.

Revenue of the company grew by 73% to N479.767 billion, up from N277.419 billion in the first half of 2023, while the company’s net finance expenses also grew by 60.5% to N154.480 billion.

Nigerian Breweries says it remains optimistic about its future despite the debt challenges.

The company expects that the N600 billion rights issue would assist in stabilising its operations by eliminating FX exposure and reducing the burden of its FX debt.

According to the Company Secretary and Legal Director, NB Plc, Uaboi, the additional capital raised via rights issue will be used for payments of all overdue FX debts and payables, eliminate FX exposure, and strengthen the company’s balance sheet and liquidity position, returning it to the path of net profitability as soon as possible.

Heineken Plc, the majority shareholder of Nigerian Breweries, has already committed to raising over 50 per cent of the N600 billion target, underscoring its confidence in the company’s long-term prospects, the company’s MD said.

Nigerian Breweries’ N600 billion rights issue marks a significant step towards resolving its FX debt and strengthening its financial position.