Champion Breweries has concluded plans to increase its capital base
in order to enhance competitiveness and ensure growth and profitability.
Chairman of the company, Alhaji Shuaibu Ottan, disclosed this during the company’s 2011 and 2012 combined annual general meeting held in Lagos.
He emphasised that re-financing of existing debt through conversion to equity and injection of fresh cash to the company through right issue are key success factors that must be embarked upon. He added that efforts were being made to secure the commitment of major shareholders to participate in the re-financing programme.
Giving account of the 2011 financial year, Ottan disclosed that the company recorded a loss of N1.8 billion, stressing that the huge downturn was principally due, in part, to the N603.5 million committed to overhauling the company’s production equipment to enhance capacity and achieve set production targets.
Other factors that contributed to the loss, according to the chairman, were interest cost of N517 million arising from the company’s accumulated debt burden, and N716 million depreciation cost, occasioned, partly by the evaluation of assets during the year.
He said that trading results for 2012 continued on the negative trend as in previous years. Though turnover remained stable at N1.8 billion, the company recorded loss of N1.3 billion. The huge loss was occasioned by interest cost of N707 million and depreciation charge of N782 million.
Ottan further explained that with the support of professional advisers, the various restructuring options were fully considered before the company opted for refinancing; debt-to-equity conversion, allotment of shares on deposit for shares account balances and rights issue.
He said that during its meeting of 7th of June, 2012, the board approved a share conversion price of N1.85 per share for the debt-to-equity conversion. He said this was based on the fact that valuation methods such as discounted cash flow do not ascribe value to the company’s shares in view of its huge debt and interest burden.
After taking into consideration the recently concluded acquisition by Consolidated Breweries Plc of the 57 percent shareholding in Champion and the regulatory filings for the transaction, which included a price of N1.85 per share, he said the price range for the debt-to-equity conversion of 50 kobo to N1.85 per share was considered.
“This means that 3.1 billion ordinary shares will be allotted to Consolidated Breweries to reduce the company’s debt with N5.735 billion. The board also resolved to propose an increase in the authorizedshare capital. This will allow for the subsequent allotment of shares to Akwa Ibom State Government and Consolidated Breweries to cover the amount in their deposit for shares account,” he said.
Chairman of the company, Alhaji Shuaibu Ottan, disclosed this during the company’s 2011 and 2012 combined annual general meeting held in Lagos.
He emphasised that re-financing of existing debt through conversion to equity and injection of fresh cash to the company through right issue are key success factors that must be embarked upon. He added that efforts were being made to secure the commitment of major shareholders to participate in the re-financing programme.
Giving account of the 2011 financial year, Ottan disclosed that the company recorded a loss of N1.8 billion, stressing that the huge downturn was principally due, in part, to the N603.5 million committed to overhauling the company’s production equipment to enhance capacity and achieve set production targets.
Other factors that contributed to the loss, according to the chairman, were interest cost of N517 million arising from the company’s accumulated debt burden, and N716 million depreciation cost, occasioned, partly by the evaluation of assets during the year.
He said that trading results for 2012 continued on the negative trend as in previous years. Though turnover remained stable at N1.8 billion, the company recorded loss of N1.3 billion. The huge loss was occasioned by interest cost of N707 million and depreciation charge of N782 million.
Ottan further explained that with the support of professional advisers, the various restructuring options were fully considered before the company opted for refinancing; debt-to-equity conversion, allotment of shares on deposit for shares account balances and rights issue.
He said that during its meeting of 7th of June, 2012, the board approved a share conversion price of N1.85 per share for the debt-to-equity conversion. He said this was based on the fact that valuation methods such as discounted cash flow do not ascribe value to the company’s shares in view of its huge debt and interest burden.
After taking into consideration the recently concluded acquisition by Consolidated Breweries Plc of the 57 percent shareholding in Champion and the regulatory filings for the transaction, which included a price of N1.85 per share, he said the price range for the debt-to-equity conversion of 50 kobo to N1.85 per share was considered.
“This means that 3.1 billion ordinary shares will be allotted to Consolidated Breweries to reduce the company’s debt with N5.735 billion. The board also resolved to propose an increase in the authorizedshare capital. This will allow for the subsequent allotment of shares to Akwa Ibom State Government and Consolidated Breweries to cover the amount in their deposit for shares account,” he said.
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