Nigerian Breweries (NB) Plc yesterday commenced the sale of its commercial paper, seeking to raise up to N20 billion in order to finance its short-term working capital requirements.
Commercial Papers are unsecured short-term (time period up to one year) debt instruments issued by corporates to get funds from the public to meet short-term debt obligations such as working capital needs.
In a statement signed by the company secretary of the Nigerian Breweries, Uaboi Agbebaku, the company said, “We have informed the Nigerian Stock Exchange (NSE) and the investing public of a rearrangement of the next tranche of the Nigerian Breweries’ Commercial Paper programme.
“The CP will now open on October 26, 2020 and will be launched in three Series, nine, 10 and 11. While Series nine would be for a tenor of 120 days, Series 10 and 11 would be for 183 days and 240 days respectively.”
According to the statement, the CP programme is aimed at raising up to N20 billion to support the Company’s short-term funding needs. The CP programme continues to provide the opportunity for non-equity investors to invest in the Company, support the Company’s cost management initiatives and serve as an additional source of funding for the Company.
Capital market analysts noted that the CP will help the company navigate through the recent impact of COVID-19 and other trade disruptions.
They added that the programme will strengthen the balance sheet of the company, and enable the brewer to execute its plans while delivering value to customers and creating wealth for shareholders, adding that “In like manner, the CP programme is expected to provide opportunities for non-equity investors to invest in the company and support its cost management initiatives.”
The company in half year period ended June 30, 2020 declared N151.810 billion revenue, a decreased of 10.8 per cent from N170.191 billion in H1, 2019, while cost of sales went down by six per cent to N92.668 billion from N98.540 billion, resulting into a gross profit of N59.141 billion, lower than N71.651 billion declared in the corresponding period of 2019.
The company noted that the half-year results for the 2020 financial year show a strong balance sheet for NB despite several factors that negatively impacted on the Company’s operations, such as an increase in Excise Duty, a rise in inflation, an increase in VAT from five per cent to 7.5 per cent, as well as the impact of the coronavirus (COVID-19) pandemic on businesses worldwide.