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Guinness Nigeria shares up 2.2%, set for N40bn rights issue

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GUINNESS Nigeria Plc  shares on the Nigerian Stock Exchange, NSE, yesterday, rose by 2.2 per cent to close at N68.70 per share after it had fallen by 19 per cent this month following poor performance of its financials in 2016.

The company would, today, seek shareholders approval to raise N40 billion ($127 million) with a rights issue of shares to strengthen its balance sheet following recent losses.

Meanwhile, the Nigerian stock market ended bullish, Monday, as bargain hunting in the Brewery sub sector of the NSE drove the All Share Index to a close of 26,231.37 points, up by three bases points, bps. Although there was sustained sell-down pressure on Nestle Nigeria Plc which dropped by 3.4 per cent but renewed investor interest in Nigerian Breweries with gains of 1.7 per cent, Guinness 2.2 per cent and Oando 3.9 per cent buoyed performance as market capitalisation added N2.7 billion to close at N9.0 trillion.

Similarly, activity level strengthened as volume and value traded improved 12.5 per cent and 27.5 per cent to 228.6million units and N2.6billion respectively. It will be recalled that Guinness Nigeria, which is 54 per cent owned by Diageo, reported in September last year it made a pre-tax loss of N2.35 billion in the year ended June 30, its first annual loss in 30 years.

In October, last year the company reported it made a further pretax loss of N 2.21 billion in the quarter ending September. 30, 2016 compared with a profit of N517.6 million in the same period of 2015. Guinness Nigeria shares, which have fallen 19 per cent this month, rose 2.2 percent to N68.70 yesterday following news of the rights issue.

“Guinness Nigeria Plc believes the rights issue will allow the company to optimize its balance sheet improving its financial and operational flexibility,” it said in a notice to shareholders.

In October Diageo scrapped plans to lift its stake in Guinness Nigeria due to the tough conditions in Nigeria. However it granted the Nigerian unit a $95 million loan facility to help it cope with dollar shortages.

Diageo had initially planned to buy 15.7 percent of Guinness Nigeria for up to N41.37 billion, which would have increased its stake to 70 percent.
Guinness said it will also seek shareholder approval to allow lenders to the company to convert the debt to equity by buying stocks in the rights issue, assuming any creditor wants to switch to shares. It was not clear whether Diageo will convert its loan this way.

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