After AGM, Nigerian Breweries Looks To Convert Parts Of N254 Billion Debt To Equity

Nigerian Breweries is attempting to turn some of its debt into equity. The decisions made during the organization’s Annual General Meeting (AGM), which took place on April 26, 2024, support this.

A decision was taken during the AGM to convert, if approved by the shareholders, some loans, borrowings, and trade payables owed to current owners into shares under the planned N600 billion rights issue.

In the statement released after the AGM, Resolution 9 read,  “That the Directors of the Company be and are hereby authorised to apply any outstanding shareholder loan, trade payable, or any other loan facility due to any person from the Company as may be agreed by the person and the Company, towards payment for any shares subscribed for by such person under the Rights Issue.”

Nigerian Breweries’ move to convert some of its loans into equity is primarily aimed at reducing its debts to its parent company, Heineken N.V., categorized as an “inter-company loan.” Additionally, this conversion addresses amounts owed to its shareholders, classified under “amount due to related parties.”

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A breakdown of the group’s liabilities for FY 2023 reveals that it owes its related parties about N166.1 billion.

The “amount due to related parties” refers to any outstanding financial obligations owed by a company to individuals or entities with whom it shares a close affiliation or relationship, which typically include its key management personnel, directors, subsidiaries, and associates.

The group currently has inter-company loans and interest of about N88.3 billion, which are owed to its parent company, Heineken N.V.

A summation of the group’s inter-company loans and its “amount due to related parties” is N254.4 billion.