Guinness seeks shareholders approval for N40bn Rights Issue

Guinness Nigeria said on Monday it was seeking shareholders approval to raise N40 billion with a Rights Issue of shares to strengthen its balance sheet following recent losses.

Shareholders will vote on the share sale on Tuesday, January 24, 2017.

The company, which is 54 per cent owned by Diageo, reported in September last year that it made a pretax loss of N2.35 billion in the year ended June 30, its first annual loss in 30 years.

In October last year the company reported it made a further pretax loss of N2.21 billion in the quarter ending Sept. 30, compared with a profit of N517.6 million in the same period of 2015.

Guinness Nigeria shares, which have fallen 19 per cent this month, rose 2.2 per cent to N68.70 on the Lagos bourse on Monday following news of the rights issue.

“Guinness Nigeria Plc believes the Rights Issue will allow the company to optimize its balance sheet improving its financial and operational flexibility,” it said in a notice to shareholders.

In October, Diageo scrapped plans to lift its stake in Guinness Nigeria due to the tough conditions in one of its biggest markets for the world-famous stout. However it granted the Nigerian unit a $95 million loan facility to help it cope with dollar shortages.

Diageo had initially planned to buy 15.7 per cent of Guinness Nigeria for up to N41.37 billion, which would have increased its stake to 70 per cent.

Guinness said on Monday it will also seek shareholder approval to allow lenders to the company to convert the debt to equity by buying stocks in the rights issue, assuming any creditor wants to switch to shares. It was not clear whether Diageo will convert its loan this way.