Shareholders of Guinness Nigeria Plc on Tuesday endorsed the proposed plan by the company to raise N40 billion through a rights issue.
They gave the endorsement at the company’s Extra-Ordinary General Meeting in Lagos.
The shareholders also authorised the directors to apply any outstanding convertible loan, shareholders loan toward payment for any rights or shares subscribed for by such person under the rights issue.
Guinness had announced at the end of 2016, its intention to offer a Rights Issue as part of plans to optimise its balance sheet and improve its financial flexibility.
NAN reports that with the approval of its shareholders, the company is now in a position to raise up to N40 billion as fresh cash injection into the business operations.
In his comments, Sunny Nwosu, the founder, Independent Shareholders Association of Nigeria, urged the shareholders to support the company by picking up their rights.
Nwosu said that they needed a more financial independent company in spite of delay in the floating of the rights issue.
He said: “We must support the company and look forward for a better organization.”
Also, Timothy Adesiyan, the President, Nigerian Shareholders Solidarity Association, said that the rights issue did not come by accident.
Adesiyan said shareholders had been looking for an opportunity to contribute to the company growth, adding that the opportunity had come with the rights issuance.
He said: “When we invest we are protecting our dividends and this is the time for us to do so rather than allowing foreigners.”
Adesiyan urged his fellow shareholders to embrace the rights to revive the company.
In his remarks, the company’s Chairman, Babatunde Savage, said the Rights Issue would afford shareholders the opportunity to increase their stakes in the company.
Savage said that every shareholder, both minority and majority, would have the opportunity to buy additional shares with the rights issue.
Savage said: “Guinness Nigeria has been in this country for over 60 years and, in that time, we have continued to add significant economic and social value to Nigeria and Nigerians.
“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 that proceeds of the rights issue would be used to optimise its balance sheet and improve the company’s financial flexibility.
He said that the economy had done a lot of damage to the manufacturing companies leading to closure of some companies.
The chairman said that the procurement of foreign exchange for importation of raw materials had remained a major challenge.
Savage said Diageo, its parent company, rescued Guinness with soft loan, which stood at N9.8 billion as at September, 2016, to procure its raw materials.
Speaking earlier, Peter Ndegwa, the Managing Director/Chief Executive Officer, said the company had good fundamentals and potential for the future.
Ndegwa said: “This rights issue, in combination with our productivity and cost optimisation drive, will help provide the fuel to continue to build this business for Nigeria and Nigerians.”