Nigerian Breweries Seeks N25bn Cash via Commercial Papers as Naira Scarcity Hits Sales

• Nigerian Breweries has quoted N25 billion worth of commercial papers to boost its operations.
• The move comes as naira scarcity affected company sales in the first quarter of 2023
• Despite the challenges, Nigerian Breweries remains committed to its operations in Nigeria and optimistic about the future of the Nigerian market

Nigerian Breweries, one of the leading breweries in Nigeria, has quoted over N25 billion worth of commercial papers on the FMDQ Securities Exchange Limited as it searches for cash to boost its operations.

NB is the company behind some of the popular beer and non-alcoholic beverages, including Star, and Amstel Malta.

What is commercial paper?

Commercial paper is a short-term debt instrument issued by corporations, financial institutions, and other entities to raise funds for short-term financing needs.

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It is often used as an alternative to bank loans or other traditional financing, as it can provide lower borrowing costs and greater flexibility.

Terms of Nigerian Breweries commercial paper

According to a statement released on the Nigerian Exchange signed by Uaboi G. Agbebaku, the company's secretary, NB said the Commercial Paper (“CP”) Programme is in Series 4, 5 and 6 and will be opened for investing public from 28th April 2023 and closes on 3rd May 2023.

The statement reads:

"Series 4 is for a tenor of 95 days (with an implied yield of 12.5%), Series 5 for 186 days (with an implied yield of 13%), and Series 6 for 228 days (with an implied yield of 14%). The minimum subscription is N5m and multiples of N1,000 thereafter.

"The Company aims to raise up to about N25 billion to support the Company’s short-term working capital and funding needs under these Series.

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The CP Programme continues to provide an additional opportunity for existing and new investors to invest in the Company, support the Company’s cost management initiatives, and serve as an additional source of funding for the Company."

Why are Nigerian Breweries seeking short-term debt

Legit.ng earlier reported that Nigerian Breweries in the first three months of 2023 reported N10.71 billion loss.

The brewer reported N123.3 billion in revenue for the first quarter of 2023, compared to N137.77 billion recorded for the same period in the previous year(2022).

NB board in the company's financial statement blamed the CBN naira redesigned policy and election for the drop in revenue.

Source: Legit.ng