TUE, JANUARY 24 2017, Lagos, Nigeria – Guinness Nigeria Plc has been granted the go-ahead by shareholders to raise N40 billion in Rights Issue during its Extra-Ordinary General Meeting (EGM) on Tuesday, 24th January 201. In addition to the Rights Issue, all other company resolutions were passed at the event.
With the approval of its shareholders, the company is now in a position to raise up to N40bn as fresh cash injection into the business operations after months of financial difficulties exacerbated by the harsh economic environment.
The company, which is 54 percent owned by Diageo, reported in September last year it made a pre-tax loss of 2.35 billion naira in the year ended June 30, its first annual loss in 30 years.
In October last year, the company which has been in business for over 60 years, reported it made a further pre-tax loss of 2.21 billion naira in the quarter ending Sept. 30, compared with a profit of 517.6 million naira in the same period of 2015.
Babatunde Savage, Chairman, Guinness Nigeria Plc, said the company believes this Rights Issue will positively impact on the financial performance of Guinness Nigeria and help mitigate the impact of increasing finance costs in what continues to be a challenging economic environment in Nigeria.
‘’ I call on all my fellow shareholders to take this opportunity and support the company’s objectives,” Savage said.
Peter Ndegwa, Managing Director/CEO, Guinness Nigeria Plc told shareholders that the company has good fundamentals and potentials for the future.
“Guinness Nigeria is a company with excellent fundamentals and we have the right strategy and the right people to grow our business for the future. This Rights Issue in combination with our productivity and cost optimization drive will help provide the fuel to continue to build this business for Nigeria and Nigerians,” he said.
Guinness Nigeria shares, which have fallen 19 percent this month, rose 2.2 percent to 68.70 naira on the Lagos bourse on Monday following news of the rights issue.
“Guinness Nigeria Plc believes the rights issue will allow the company to optimize its balance sheet improving its financial and operational flexibility,” it said in a notice to shareholders.
In October Diageo scrapped plans to lift its stake in Guinness Nigeria due to the tough conditions in one of its biggest markets for the world-famous stout. However it granted the Nigerian unit a $95 million loan facility to help it cope with dollar shortages.
Diageo had initially planned to buy 15.7 percent of Guinness Nigeria for up to 41.37 billion naira, which would have increased its stake to 70 percent.
Guinness said on Monday it will also seek shareholder approval to allow lenders to the company to convert the debt to equity by buying stocks in the rights issue, assuming any creditor wants to switch to shares. It was not clear whether D
Guinness Nigeria Plc last year became the first total beverage company in Nigeria when it acquired rights to distribute international premium spirits like Johnnie Walker and Baileys in Nigeria in January 2016 and later commissioned a spirits line for locally manufactured spirits at its Benin plant in November.
This week, the company is also expected to release its first half results for the 6-month period ended 31stDecember 2016.
