Guinness proposed N40 bn rights issue: What you need to know

Guinness Nigeria is seeking to raise up to N40 billion by way of a rights Issue, through the issuance of ordinary shares, according to a statement released today by the firm and signed by

the Company Secretary Rotimi Odusola.

An extraordinary general meeting of the members of Guinness Nigeria Plc will be held at the Ballroom, Lagos Oriental Hotel, 3 Lekki Road, Victoria Island Lagos on Tuesday, 24 January 2017 at 10.00 o’clock in the afternoon to consider the rights issue.

Implication for shareholders

BusinesDay calculates that Guinness Nigeria would have to issue an additional 479 million shares to raise the total of N40 billion, potentially diluting existing shareholders by 30 percent.

Guinness has a market capitalisation of N125.7 billion with 1.51 billion shares outstanding and a free float of 686.82 million.

The notice released by Guinness today that the Directors of the Company are authorised “to apply any outstanding convertible loan, shareholder loan or other loan facility due to any person from the Company towards payment for any rights or shares subscribed for by such person under the Rights Issue.”

This is essentially a debt to equity conversion and would be positive for the company in the medium to long term.

Guinness had total loans and borrowings of N36.88 billion as at September 30 th , 2016 and spent N1.16 billion as interest expense as at the September 2016 period.

Guinness reported a loss of N2.2 billion for the period and its shares listed on the Nigerian Stock Exchange (NSE) are down 34 percent in the past year.

 

PATRICK ATUANYA