Companies
Nigerian Breweries looks to convert parts of N254 billion debt to equity
Nigerian Breweries is seeking to convert part of its liabilities into equities. This is according to the resolutions from the group’s Annual General Meeting (AGM) held on April 26, 2024.
During the AGM, a resolution was made to convert certain loans, borrowings, and trade payables owed to existing shareholders into shares under the proposed N600 billion rights issue, if agreed by the shareholders.
In the statement released after the AGM, Resolution 9 read,
- “That the Directors of the Company be and are hereby authorised to apply any outstanding shareholder loan, trade payable, or any other loan facility due to any person from the Company as may be agreed by the person and the Company, towards payment for any shares subscribed for by such person under the Rights Issue.”
- Nigerian Breweries’ move to convert some of its loans into equity is primarily aimed at reducing its debts to its parent company, Heineken N.V., categorized as an “inter-company loan.” Additionally, this conversion addresses amounts owed to its shareholders, classified under “amount due to related parties.”
A breakdown of the group’s liabilities for FY 2023 reveals that it owes its related parties about N166.1 billion.
The “amount due to related parties” refers to any outstanding financial obligations owed by a company to individuals or entities with whom it shares a close affiliation or relationship, which typically include its key management personnel, directors, subsidiaries, and associates.
The group currently has inter-company loans and interest of about N88.3 billion, which are owed to its parent company, Heineken N.V.
A summation of the group’s inter-company loans and its “amount due to related parties” is N254.4 billion.
What you should know
Nigerian Breweries is currently planning to raise N600 billion through a rights issue in the Nigerian stock market. In 2023, the group grew its liabilities to N733 billion, up from 2022’s N408 billion.
Among its liabilities, current liabilities make up about N584.4 billion, with trade and other payables being the major items with about N355.3 billion.
A breakdown of the group’s trade and other payables reveals that the group owed its vendors and suppliers about N77.8 billion, as of December 31, 2023. The group also had a liability of N28.6 billion in terms of returnable packaging materials.
Essentially, when they sell a finished product, they charge a deposit fee. This fee is refunded when customers return the empty packaging material, usually the crates and bottles.
In terms of non-trade payables and accrued expenses, Nigerian Breweries also accrued liabilities of about N82.8 billion as of December 31, 2023.
