International Breweries to sell 161bn shares through rights issue

International Breweries Plc has announced plans to sell 161,172,395,100 ordinary shares through rights issue.

In a statement on Wednesday by Marian Reginald-Ukwuoma, secretary and legal counsel of the company, the decision was approved by the Securities Exchange Commission (SEC).

“International Breweries PLC (“the Company”) is pleased to notify its esteemed Shareholders, Stakeholders, Nigerian Exchange Limited (“The Exchange”) and the general public, that the Company has obtained approval from the Securities Exchange Commission (“the Commission”) to offer to the shareholders the proposed Rights Issue of 161,172,395,100 Ordinary Shares of 2 Kobo each at N3.65 Per Share, on the basis of six (6) new ordinary shares for every one (1) existing ordinary share held,” the brewer said.

“The qualification date for the Rights Issue is May 2, 2024. The application list opened on May 21, 2024, and will close on June 10, 2024 as approved by the commission.”

International Breweries said the rights circular will be distributed to shareholders by the company’s registrars, while application forms will also be made available on the websites of the company and the registrars for ease of access.

The brewer urged shareholders to contact their stockbrokers and other financial advisers for more details of the offer.

‘RIGHTS ISSUE WILL CAUSE SHARE DILUTION, OFFSET DEBT’

Abuede said there might be an issue of dilution in shareholders’ shares but also provides more capital from the public to the company’s purse.

“There may be issue of dilution, but since it is coming at a discount, it still provides opportunity for value creation or to increase your investment in the company and the fact that the shares is currently at 2 kobo ordinary share, initially at 2019, it was at 50 kobo ordinary share, there is likely to be a kind of reconstruction to be made on the stock not just to increase shares outstanding, but to raise equity, to raise capital,” he said.

“It is not really about increasing the outstanding shares in the market, it is just seeking more equity from the public and increasing it.

“For investors in the market, they will actually look into that and based on valuation, the likelihood that the company will show strong potential, so that will actually give investors to take position in it.”

He said the company’s debt burden is likely to reduce because AB InBev Nigeria Holdings, International Breweries’ parent company, may inject funds to help offset any existing debt.

“The capital raise is a good one, it is in a good position to offset whatever debt burden they will have after this capital raise and it also provides investment opportunity,” Abuede said.

“Despite the foreign exchange (FX) column, which we have seen so far in 2023 and now 2024, owing to the incoherent FX policies we have in Nigeria and owing to the devaluation of the naira, we have seen all the manufacturing firms reporting losses. That is very humongous.”

Abuede said it is beneficial for the company as it will enhance its capital base and strengthen its capital adequacy.