Guinness Nigeria offers 5 for 11 shares in N39.7b rights issue

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Guinness Nigeria Plc would be raising N39.7 billion in new equity funds from shareholders in the book of the company as at the close of business yesterday.

More details emerged yesterday as the board of directors of Guinness Nigeria, through its stockbroker, Stanbic IBTC Stockbrokers Limited, filed application for regulatory approval for the supplementary new issue.

According to the regulatory filing obtained by The Nation, Guinness Nigeria will be offering 684.495 million ordinary shares of 50 kobo each to shareholders at a discounted price of N58 per share. The rights’ shares will be pre-allotted on the basis of five new ordinary shares for every 11 ordinary shares held as at March 15, 2017.

The rights’ issue price of N58 per share represents a discount of 17 per cent from Guinness Nigeria’s last traded price of N70 per share yesterday at the Nigerian Stock Exchange (NSE). Guinness Nigeria rode on the back of the scramble to make the qualification date for the rights issue, rising by the day’s highest gain of N2 to close at N70.

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Shareholders had in January 2017 approved the plan by the board of directors of the company to raise some N40 billion new equity funds from existing shareholders.

At the extraordinary general meeting in Lagos, shareholders passed resolutions authorizing the board of directors to proceed with the proposed rights issue, which will enable the company to raise up to N40 billion in new capital.

Speaking at the meeting, chairman, Guinness Nigeria, Babatunde Savage, said the new equity funds would support the long-term performance of the company and help to position it in better stead to weather the challenges in the operating environment.

“We believe this rights issue will positively impact on the financial performance of Guinness Nigeria and help mitigate the impact of increasing finance costs in what continues to be a challenging economic environment in Nigeria. I call on all my fellow shareholders to take this opportunity and support the company’s objectives,” Savage said.

In his remarks, managing director, Guinness Nigeria, Peter Ndegwa, said that the company has good fundamentals and potential for the future.

“This rights issue in combination with our productivity and cost optimization drive will help provide the fuel to continue to build this business for Nigeria and Nigerians,” Ndegwa said.

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The proposed capital issue will provide another window for Diageo Plc, the parent company and majority shareholder of Guinness Nigeria Plc, to inject capital into the Nigerian subsidiary after the multinational backed down from its earlier proposal to acquire additional equity shares in Guinness Nigeria.

Diageo had recently withdrawn from its plan to acquire additional shares of up to 15.7 per cent in Guinness Nigeria citing the challenging market conditions in Nigeria. Diageo had in September 2015 announced that it was considering acquiring 15.7 per cent equity stake in Guinness Nigeria through its wholly owned subsidiary, Guinness Overseas Limited.

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