Guinness Nigeria announces rights issue price at N58.00, 17% discount to market price


Wednesday, March 15, 2017/ 3:25 PM /CardinalStone Research

Guinness Nigeria Plc (Guinness) through its stockbroker - Stanbic IBTC Stockbrokers Limited submitted an application to the Nigerian Stock Exchange (NSE) for approval and listing of a rights issue of 684,494,631 Ordinary Shares of 50 Kobo each at N58.00 per share on the basis of 5 new Ordinary Share for every 11 Ordinary Share held (5:11).

The rights price is at a 14.7% discount to yesterday's close price. The qualification date for the rights issue is today, Wednesday 15 March 2017.  

The company intends to use the funds to deleverage its balance sheet given its relatively high debt level (Debt/Equity ratio of 1.3 vs. Nigerian Breweries of 0.1), finance its working capital needs and expand its operations.   

We note that the parent company - Diageo Plc - plans to take up its rights by way of a debt/equity swap wherein the outstanding foreign currency loan (N20.3 billion as at H1'17) from Diageo will be used as payment for its rights in Guinness. 

In the event of an under-subscription, Diageo Plc has the opportunity to take-up the rights of other shareholders who did not participate in the offer.

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