Nigeria: Guinness Nigeria Plc’s N40 bln rights issue records full subscription

Guinness Nigeria Plc has secured additional N39.7 billion new equity funds from its existing shareholders as shareholders picked up the entire rights offered by the brewer, The Nation Newspaper reported on October 30.

Guinness Nigeria had offered 684.49 million ordinary shares of 50 kobo each at N58 per share to existing shareholders on the basis of five new shares for every 11 shares held as at the close of business on March 15, 2017. Application list for the rights issue opened on July 24, 2017 and closed on August 30, 2017.

Listing documents at the weekend showed that 684.49 million ordinary shares of 50 kobo each were added to shares outstanding in the names of Guinness Nigeria. With the listing, total issued and fully paid up shares of Guinness Nigeria has now increased from 1.5 billion shares to 2.19 billion shares.

Diageo Plc, United Kingdom (UK), the majority core investor in Guinness Nigeria, was expected to inject additional N21 billion in Guinness Nigeria by subscribing for its rights. The rights issue provided another window for Diageo to inject capital into the Nigerian subsidiary after the multinational backed down from its earlier proposal to acquire additional equity shares in Guinness Nigeria.

Diageo had withdrawn from its plan to acquire additional shares of up to 15.7 per cent in Guinness Nigeria from minority shareholders, citing the challenging market conditions in Nigeria. Diageo had in September 2015 announced that it was considering acquiring 15.7 per cent equity stake in Guinness Nigeria through its wholly owned subsidiary, Guinness Overseas Limited.

Managing Director, Guinness Nigeria Plc, Peter Ndegwa, said the net proceeds of the new capital raising will support the company in executing its strategy in the context of ongoing external economic challenges.

According to him, the rights issue will allow the company to deliver on its strategic objectives and give all its shareholders a unique opportunity to increase the number of shares they hold.

“Our expectation is that funds raised will help mitigate the impact of increasing finance costs, optimise our balance sheet and improve the company’s financial flexibility,” Ndegwa said.

Chairman, Guinness Nigeria Plc, Babatunde Savage, said the supplementary new issue is part of the company’s long term plans to continue to invest in its business in Nigeria.

“We have been here in Nigeria for 67 years and, while it has been challenging in recent times for many Nigerian businesses, we remain committed to this market as evidenced by our decision to offer this Rights Issue. We are grateful for the support that we have received from our shareholders and other stakeholders up to this point,” Savage said.

Last year, Guinness Nigeria became the first total beverage alcohol company in Nigeria by acquiring the rights to distribute international premium spirits like Johnnie Walker whisky and Bailey’s liqueur in Nigeria and later commissioning a N4.7 billion spirits line for locally manufactured spirits at its Benin plant.

30 October, 2017