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Cadbury restructures balance sheet for better dividend

By Peter Egwuatu and  Michael Eboh
Cadbury Nigeria Plc has  announced plans to restructure its balance sheet in order to ensure that shareholders get better dividend for their investment.

Speaking at a presentation of its ongoing rights issue to the capital market operators on Tuesday, in Lagos, the Managing Director/CEO of Cadbury Nigeria Plc, Mr. Alan Palmer stated that various strategies have been put in place to ensure that the balance sheet is structured in way that it would begin to yield dividend to shareholders.

According to him, “ We have introduced various cost-cutting measures to bring about a reduction in our soaring cost base. We have also taken strategic steps to ensure the simplification of our business processes that will ensure the growth of our key strong brands.”

Palmer disclosed that after settling the debts owed to banks, the company plans to use parts of the offer proceeds to increase its investment in its power generating facility and other infrastructure that will help boost its production activities.

The company is offering by way of rights, 2.57 billion ordinary shares of 50 kobo each at N8.65 per share. The offer is on the basis of seven new ordinary shares for every three ordinary shares held by its shareholders as at June 26, 2009.

According to the offer document, majority of the proceeds from the issue will be used in the repayment of its debts owed to banks, while part of the proceeds would be used to fund the improvement of capacity supporting infrastructures, upgrade of its utilities among others.

The prospectus stated, “The issue is being undertaken to enable the company repay its bank borrowing while the remaining fund will be applied to fund the improvement of capacity supporting infrastructures, efficiency initiatives and upgrade of utilities.”

It disclosed that N15.55 billion, representing 72 per cent of the offer proceeds would be used in repayment of bank borrowings while N6.14 billion, representing 28 per cent of the offer proceeds would be used for improvement of capacity supporting infrastructure and upgrade of facilities.Palmer called on stockbrokers to support its refinancing effort by encouraging shareholders’ participation.

According to him, “There are two ways our shareholders can participate in the Rights Issue: by taking up their allotted rights or trading them for value. Each option comes with clear advantages. Shareholders who take up their rights have an opportunity to significantly increase their shareholdings in the company post-issue since every shareholder has a provisional allotment of seven shares for every three held as at June 26, 2009.”

“However, shareholders can also choose to trade their rights to other willing buyers on the floor of the Stock Exchange and gain a monetary premium on their shares. The critical action is that our shareholders should be encouraged to take action and participate in the Rights Issue.”


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