International Breweries Shareholders Approve $379.9 Million Loan-to-Equity Conversion in Nigeria

International Breweries, a subsidiary of Anheuser-Busch InBev, approved a $379.9M loan-to-equity conversion to strengthen its balance sheet and reduce debt, a significant step in navigating Nigeria's challenging economic environment.

Quadri Adejumo
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International Breweries Shareholders Approve $379.9 Million Loan-to-Equity Conversion in Nigeria

International Breweries Shareholders Approve $379.9 Million Loan-to-Equity Conversion in Nigeria

Shareholders of International Breweries Plc, a subsidiary of Anheuser-Busch InBev, have approved a $379.9 million loan-to-equity conversion in Nigeria. The approval was given at the Extraordinary General Meeting held in Lagos on Thursday. The shareholders accepted and approved the $379.9 million convertible loan from AB InBev Nigeria Holdings BV to repay a loan from Citibank Abu Dhabi, subject to management's terms.

The directors were authorized to apply the sums due from the company to AB InBev Nigeria Holdings BV under the shareholders' loan towards payment for any shares subscribed for by AB InBev Nigeria Holdings BV in the company's rights issue that has been approved by the shareholders. This move is aimed at strengthening the company's balance sheet and reducing its debt burden.

Why this matters: The loan-to-equity conversion is a significant step forward for International Breweries as it navigates the challenging economic environment in Nigeria, which has been impacted by factors such as currency depreciation and high inflation. This initiative will improve the company's financial position and allow it to focus on growth and expansion in the Nigerian market.

International Breweries has been struggling with escalating losses over the past five years, with an after-tax loss of N70.026 billion in 2023. The company's revenue grew to 260.59 billion Nigerian Naira in 2023, up from 218.65 billion Naira in 2022, but it suffered a loss due to foreign exchange losses. The debt-to-equity conversion will involve issuing new shares, leading to dilution of existing shareholders' ownership stakes, including minority shareholders.

However, financial analysts anticipate a positive economic outlook as the naira continues to stabilize against the dollar, which could help the company return to profitability in the 2024 fiscal year. The analysts commend the business recovery initiatives of International Breweries, which they see as indicative of a commitment to retaining and rewarding the trust of their shareholders.

The loan-to-equity conversion is part of International Breweries' broader business restructuring effort. The company's issued share capital stood at 26,862,069,000 ordinary shares of 50 kobo each as of the end of December 2023, with Brauhaase International Management GMBH and AB InBev Nigeria Holding BV holding an 87.29% equity interest. The conversion could help the company reduce its leverage, lower interest expenses, and improve its financial health, potentially leading to long-term profitability and value creation for all stakeholders.

Key Takeaways

  • Shareholders of International Breweries approved $379.9M loan-to-equity conversion.
  • Conversion aimed at strengthening balance sheet and reducing debt burden.
  • Company suffered escalating losses over past 5 years, with $70M loss in 2023.
  • Conversion to involve issuing new shares, diluting existing shareholders' stakes.
  • Analysts expect positive outlook as naira stabilizes, company returns to profitability.