Nigeria: International Breweries Plc to invest in acquisition of additional brewing firms

International Breweries Plc said it plans to invest in the acquisition of additional brewing firms as parts of its strategies for expansion and growth programmes, Vanguard reported on November, 11.

To this end, the company is raising N7.51 billion through a rights issue of 1.479 billion ordinary shares of 50 kobo each at N5.08 per share, scheduled to commence November 21 and end, December 28, 2011, on the basis of seven new ordinary shares of 50 kobo each for every 10 existing shares held by its shareholders as at July 5, 2011.

Speaking at the the Completion Board Meeting in respect of the forthcoming rights issue, Managing Director of the company, Mr. Michael Daramola, said the investment is in addition to other projects already being undertaken by the company to grow its capacity.

According to him, the company is considering investing in a second bottling line and other features to improve capacity, scheduled to come on stream in 2013, thus increasing capacity utilization to about 1.6 million hectolitres.

He averred that the net proceed from the offer, put at about N7.275 billion will be utilized in refinancing its long-term loan facilities that was used to fund various expansion works at his factory.

He further stated that the proceeds will also be used to boost its working capital, thereby ensuring the regular supply of raw materials, fuel, spares and other essentials for uninterrupted production in order to meet the increasing demands of its customers.

The offer document said 84.67 per cent of the net issue proceeds will be utilized to refinance long term indebtedness of the company to the tune of N6.159 billion as contractual agreement between the company and Sacrofina SA, on the one hand, and Globe Export Limited, adding that the amount was guaranteed by Brasseries International and expended to finance various works at the factory.

Daramola explained that foreign exchange fluctuations have adversely affected the profitability of company, adding that with proceeds from the rights issue, the company will be able to offset a substantial amount of its foreign exchange loans.

As a result of the increase in its working capital, he said the profit of the company will be increased substantially, leading to increased returns for its shareholders.

Speaking on the future plans, Chairman of the company, Mr. Gil Martignac, disclosed that the company was committed to ensuring and sustaining profitability in the short term and long term.

12 November, 2011