Nigerian Breweries Is Set To Raise N599bn Through Rights Issue As Heineken Freezes Loan Interest

Nigerian Breweries PLC has secured crucial support from its parent company, Heineken, which has agreed to suspend interest payments on loans to the Nigerian subsidiary.
This development was announced by Managing Director, Mr. Hans Essaadi, at the Nigerian Exchange (NGX) ‘Facts Behind the Rights Issue’ event.
The suspension of loan interest is part of Nigerian Breweries’ broader financial restructuring strategy amidst a challenging economic climate characterised by high inflation, foreign exchange losses, and escalating operational costs.
Nigerian Breweries is set to raise N599.1 billion through a rights issue, offering 22.6 billion ordinary shares at N26.50 per share to existing shareholders. The rights issue, based on a ratio of 11 new shares for every 5 held as of July 12, 2024, aims to address local debt and mitigate foreign exchange liabilities.
Company Secretary Mr. Uaboi Agbebaku, confirmed the target amount and highlighted the urgency of resolving FX liabilities to stabilise the company’s profit and loss accounts. The capital raised will also be utilised to reduce bank debt, thereby lowering interest costs and alleviating financial pressure.
Mr. Agbebaku attributed the company’s recent financial strain to the devaluation of the naira and soaring inflation, which have increased costs significantly. Foreign exchange losses have notably impacted Nigerian Breweries’ financial performance.
Mr. Essaadi acknowledged the difficult operating environment but expressed confidence in the company’s strategic steps to secure its future.
“Our FX losses are substantial, and resolving these will stabilise our profit and loss accounts,” Essaadi stated.
He also affirmed that Nigerian Breweries is focused on reducing local debt to lessen the interest burden and ease financial pressures.
Despite the tough economic conditions, Nigerian Breweries reported notable revenue growth of N479.7 billion for the first half of 2024, a 72.9 percent increase from the previous year. However, this growth was overshadowed by a 71.5 percent increase in pre-tax losses, reflecting the impact of rising operating costs.
The company’s total assets reached N948 billion by mid-2024, up from N795 billion at the end of 2023, but current liabilities surged by 22 percent, indicating significant financial strain.
Nigerian Breweries’ stock has shown a gradual recovery from a low of N20.52 per share in 2020, driven by increased market activity. Although the stock peaked at N49.92 in 2022, it has recently traded below N30 in 2024.

The company’s efforts to reduce debt and stabilise its operations are expected to drive trading volumes and potentially push the stock back toward the N50 technical level.