Nigeria: Nigerian Stock Exchange receives Guinness Nigeria’s N40 bln rights issue request

The Nigerian Stock Exchange (NSE) has received for approval and listing, the application of Guinness Nigeria’s right issue of N40 billion, WorldStage reported on March 20.

The request to the NSE is coming on the heels of shareholders’ approval given on the 24th of January at Guinness’s Extra-ordinary General Meeting (EGM).

The NSE who notified dealing members of the application stated that it was received through Guinness’s Stockbroker; Stanbic IBTC Stockbrokers Limited.

According to the NSE, the Rights Issue is offering 684,494,631 Ordinary Shares of 50 Kobo each at N58.00 per share.

Existing shareholders, at this price will thus have the opportunity to buy additional 5 new Ordinary Share for every 11 Ordinary Share held.

At the terms set, Guinness Nigeria looks to raise at least N39,700,688,598 for the purpose of positively impacting the company’s financial performance and strengthen its balance sheet.

The company reported its first annual loss of N2.7 billion, in three decades last year September which further compounded to a loss after tax of 4.7 billion in its half year period ended December 31, 2017.

However, with the rights issue, the company is more certain of raising capital, and also gets to leave control in the hands of existing shareholders, avoid expenses for a public offer, and preserve company image.

Shareholders have the option to either take up the rights to purchase in full, Ignore the rights issue which is usually not recommended giving the fact that such shareholding will be diluted as a result of the extra shares issued or Sell rights to other investors.

Asides the benefits of a rights issue to the company, shareholders who partake automatically get a tax free dividend, and get the opportunity to purchase new shares at a discount to the market price.

As at close of business on March 17 the offer represents a 21 percent discount to March 17th’s market price of N66.50.

Whilst urging shareholders to take their rights, the Managing Director/CEO of Guinness Nigeria Plc, Peter Ndegwa, had had at its EGM reminded shareholders of the good fundamentals and potentials the company has.

He said “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.”

On his part, the Chairman of Guinness Nigeria Plc, Babatunde Savage, said “Guinness Nigeria has been in this country for over 60 years and, in that time, we have continued to add significant economic and social value to Nigeria and Nigerians.

“We believe 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.”

21 March, 2017