How FX shortage complicates Guinness Nigeria’s $23m debt refinancing

As Nigeria, financial institutions and other multinational companies with debt obligations in foreign-currency struggle to cope with forex illiquidity in the country, Guinness Nigeria Plc is currently finding it difficult to refinance its over $23million loans due toshortage of dollars in Nigeria.

Speaking an investor call in Lagos recently, Finance and Strategy Director, Stanley Njoroge, said Diageo Plc’s Nigeria unit is weighing options to manage a $23 million debt as a lack of liquidity in the local foreign-exchange market has made it difficult to refinance.

Naija247 reported that the Diageo Plc’s Nigeria unit director said, “We will want to refinance it but there is no foreign currency in the market at the moment,” he said.

The brewer of Guinness Stout is looking to roll over the loan which matures in May next year but is yet to decide whether to keep it as a dollar debt or convert to a local-currency loan.Nigeria’s second-largest brewer’s outstanding debt rose 16 per cent to N23.2 billion naira ($60 million) as of June compared with a year ago, while finance costs rose 74 per cent to 4.5 billion.

Nigerian companies are struggling to access the greenback after a slump in oil prices cut export earnings, putting pressure on the central bank’s capacity to meet dollar obligations to investors and businesses. “Foreign exchange is a big concern for us,” Njoroge said.

Guinness Nigeria made a net loss of N12.6 billion for the full year through June compared with a profit of N5.5 billion a year ago, according to its filing on the Nigerian Stock Exchange on Friday. Revenue dropped by 21 per cent to N104.4 billion.

The company will prioritize stout, spirit and malt brands in 2020 and focus less on lager as it aims to grow the business and cushion the impact of the Covid-19 pandemic on operations, Njoroge said.

“We don’t have the right price in lager,” he said.