| LAGOS, March 15
LAGOS, March 15 Guinness Nigeria
said on Wednesday it had applied to the Nigerian Stock Exchange
to get approval for a share sale to raise 39.7 billion naira
($130 million), its chief executive told Reuters.
The company, the local division of the world's leading
spirit maker Diageo, said it would issue the shares to
existing shareholders at 58 naira each, a 21 percent discount to
Wednesday's market price. Shareholders would be offered five new
shares for every 11 held.
The company, which is 54 percent owned by Diageo, reported
in September last year a pretax loss of 2.35 billion naira for
the year ended June 30, its first annual loss in 30 years,
triggering the share sale.
Shareholders approved the sale in January.
"Our expectation is that this rights issue will help
mitigate the impact of increasing finance costs, optimise our
balance sheet and improve the company's financial flexibility,"
Peter Ndegwa, chief executive Guinness Nigeria, said.
"We expect that this issue will help us ... return the
company to profitability in the long term," he told Reuters
Guinness Nigeria shares, which have fallen 18 percent so far
this year, rose 2.9 percent to 70 naira on the Lagos bourse on
Wednesday. The stock fell 31 percent last year.
Africa's biggest economy is in its first recession in 25
years, brought on by low oil prices, which have slashed
government revenues and crippled dollar supplies in the country,
making life difficult for businesses.
In October, Diageo scrapped plans to increase its stake in
Guinness Nigeria due to the tough conditions in one of its
biggest markets for the world-famous stout. But it granted the
Nigerian division a $95 million loan facility to help it to cope
with the dollar shortages.
As of October last year, the Nigerian subsidiary had only
drawn $30 million from the facility.
Diageo intends to convert the outstanding loan granted to
Guinness Nigeria into equity via the rights issue, the company
has said, adding that it believed this was beneficial in the
wake of the weakening naira currency.
The naira lost a third of its official value
against the dollar last year and has been quoted at
even weaker levels on the black market this year.
($1 = 305.20 naira)
(Editing by Jane Merriman)