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Guinness Nigeria to Convert Loans to Shares to Conserve Funds
LAGOS (Capital Markets in Africa) – Guinness Nigeria Plc, the country’s second-biggest brewer, plans to convert a portion of dollar-denominated loans from parent Diageo Plc into shares to limit the impact of exchange-rate volatility and conserve cash.
“We don’t want to be holding foreign-currency loans,” ChairmanBabatunde Savage told shareholders at a meeting in Lagos, Nigeria’s commercial capital, on Tuesday. The company’s cash flow is already under pressure from a Nigerian economic downturn, he said.
The company took out dollar-denominated loans worth 9.8 billion naira ($31 million) from London-based Diageo up to end September to fund operations amid a dollar shortage in Africa’s most populous country, according to the chairman. Nigerian businesses are struggling to obtain the U.S. currency as a slide in oil prices from mid-2014 cut government revenue and hinder supply by lenders.
Guinness Nigeria received approval from shareholders on Tuesday to raise 40 billion naira in a rights issue and has appointed Stanbic IBTC Holdings Ltd., a unit of Johannesburg-based Standard Bank Group Ltd. The fundraising will take place after receiving approval from regulators, Savage said.