Guinness Nigeria on Tuesday launched a share sale to raise N39.7bn (about $126m) by way of a rights issue to existing shareholders as part of efforts to restrain its rising financing costs after reporting its first year-end loss in 30 years last year.
Under the arrangement, shareholders are being offered five new shares for every 11 held at N58 each, a 10.2 percent discount to Tuesday’s market price of N64.57.
Reuters quoted the chief executive- Peter Ndegwa said as saying in a statement: “Our expectation is that funds raised will help mitigate the impact of increasing finance costs, optimize our balance sheet and improve the company’s financial flexibility.”
The need to reinvest in the company, after Diageo, its parent company, last year opted for a rights issue, rather than an earlier announced bailout. The rights offer many see Diageo raising its stake in Guinness Nigeria from its 54%.
In September last year, Guinness presented its account showing a pretax loss of N2.35bn for the year ended June 30, its first annual loss in 30 years, triggering the share sale.
Last year Guinness acquired the rights to distribute Johnnie Walker whisky and Baileys liqueur in Nigeria and commissioned a N4.7bn production line at one of its plant to produce spirits locally.