International Breweries Plc announced on Thursday that its shareholders at an Extra-Ordinary General Meeting (AGM) held on Tuesday, 15th October 2019 approved the ‘Rights Issue’ as proposed by the Board of Directors.
Following the shareholders’ approval, the Board of Directors convened and proposed a Rights Issue price of N9 per share.
In a statement released to the Nigerian Stock Exchange (NSE) on Thursday, the company said: “International Breweries Plc (“International Breweries” or “the Company”) hereby notifies The Nigerian Stock Exchange that the Shareholders of the Company at the General Meeting held on 15 October, 2019 approved the Rights Issue as proposed by the Board of Directors and authorized the Board to take all steps required to give effect to the Resolutions as approved.
“Following this approval, the Board of Directors discussed the forthcoming Rights Issue and the proposed terms thereof and approved a Rights Issue price of N9.00 per share,” according to the statement.
The company said that further details on the Rights Issue will be provided in due course.
International Breweries first notified the NSE of its intention to seek a “Rights issue” on 19th September 2019 following a meeting of the company’s Board of Directors on 18th September. The company said that it considered and approved a proposal for a Rights Issue as a form of Capital Raising for the Company.
A rights issue is an issue of shares offered at a special discounted price by a company to its existing shareholders in proportion to their holding of old shares.
International Breweries is seeking to use the Rights Issue to pay down mountain debt it accumulated in the process of expanding its operational capacity. It completed the construction of a new brewery in Sagamu, Ogun State in 2018 at an initial cost of US$250m, with the company indicating that the final cost could reach US$400m.
While the company has seen its revenue growth, the effort has come at a cost. Cost of sales has risen, and so has administrative expenses. The company posted a net loss of N4bn in 2018 and the losses have continued into the first half of 2019, recording N6.8bn in a net loss as of 30th June 2019.
International Breweries Plc is the Nigerian subsidiary of Anheuser-Busch InBev (AB InBev), the world’s largest brewer. Some of its brands include Hero Lager, Trophy Lager, Beta Malt, Grand Malt and Budweiser amongst others.