International Breweries targets N165bn in rights issue for future plans

With express approval by its shareholders and relevant agencies of government, including the Security and Exchange Commission (SEC), International Breweries Plc., a part of AB InBev, the world’s largest brewer is raising an additional capital of N165 billion for its business operations through the Rights issue of ordinary shares.

The company, Secretary and Legal Counsel, Muyiwa Ayojimi in a statement noted that the firm has opened an offer of 18, 266, 206, 614 units of ordinary shares of 50 kobo each at N9.00 per share.

The offer, which opened on Thursday, December 5, 2019, is expected to close Tuesday, December 24, 2019.

According to the statement, for every 8 shares held by shareholders whose names appeared in the register of members of the company as at November 6, 2019, an offer of 17 ordinary shares is made.It noted that the offer, which has been well received and subscribed to, was still open and available to existing shareholders to take advantage of, before it closes on Tuesday.

Through the Rights issue, the company’s capital structure is expected to be remarkably changed as long-term debt is replaced with equity, thereby easing the burden of interest payments, increasing management’s flexibility as well as removing volatility in earnings.

This offer, which interestingly is currently the largest Rights issue in Nigeria, is to have its full impact reflected in 2020 while presenting a positive outlook for dividends for shareholders in 2021.

With a fair post rights issue valuation range of N471 – N504 billion, International Breweries, by this Rights issue, will likely become the seventh most capitalised company on the Nigerian Stock Exchange.

Through International Breweries Plc., its parent company, AB InBev, by this offer certainly has a long-term outlook for Nigeria. AB InBev, for instance, has invested in capacity expansion, about N90 billion ($250 million) in the Sagamu plant and will be injecting N124 billion ($341 million) via the Rights issue.

Unarguably the number two brewer in Nigeria, International Breweries Plc., despite the difficult competitive environment that features weak macroeconomics, tough excise tax regime and fierce price war now controls about 25 per cent of the Nigerian beer market through its hold of market share on the back of its two core brands – Trophy and Hero.

With the new capacity on stream and ramped up investments in RTM, the company is expected to consolidate on its leadership and continue to take a share of the market.

Established in 1971 and listed on the Nigerian Stock Exchange in 1995, International Breweries Plc. brews product brands such as Trophy Lager, Hero Lager, Betamalt, Grandmalt and the premium brand, Budweiser.