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HomeCompany NewsNigerian Breweries to borrow €110 mln from Heineken to offset debts

Nigerian Breweries to borrow €110 mln from Heineken to offset debts

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Nigerian Breweries Plc has said it will seek shareholders’ approval for a loan of €110 million from its parent company, Heineken International, at its forthcoming annual general meeting (AGM).

According to the company’s Finance Director, Ben Wessels Boer, NB plans to deploy the facility to defray some foreign loans and outstanding debt to IBECOR and the buying agent.’

Boer said foreign exchange losses had a major impact on the company’s profitability in 2022, while adding that it would settle its long-overdue payables to IBECOR and Heineken International via a €110 million loan and would need shareholders’ approval for the loan.

“We expect that if it is approved, we can already get the loan in May 2023, and basically, we will use that, and indeed, it is enough to pay the overdues to our buying agent and all the full denominated debts.

“We also have some debt that is not foreign-denominated, which includes dividends to Heineken and also royalties. We are not using this debt to repay those, but it is for the foreign-denominated debt that we will pay and also for machinery because that part of course is critical for our business continuity”, Boer said.

Also, the Managing Director of the Brewer of Alcoholic and Non-Alcoholic Beverages, Hans Essaadi, said the company is still in dialogue with the Federal Government over the proposed increase in excise duty on its products.

He said the proposed increase in excise duty would have a devastating effect on its business as well as the performance of the brewery sector.

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Essaadi said while the fundamentals of the Nigerian market are very positive with the benefit of an enabling environment, the nation’s macro-economic indicators, security, and infrastructure continue to remain at high risk.

He stated that the company believes that it would respectfully pay its duties and taxes in full but noted that the notion of further excise tax increases, including significant ones that are being rumored at this point in time, would have a devastating effect on the company’s business.

“We believe that, especially at this moment in time, this is the wrong thing to do. We are in dialogue with the government, but we want to say that we are trying to dialogue with the government to ensure we pay fair amounts of tax without overdoing it because ultimately, excise tax increases significantly result in price increases in the market.

“This in turn affects the consumer as regards higher prices, which will then come with restricted disposable income, which will lead to less revenue but ultimately lead to more poverty in the market.

“We are one of the businesses that are being confronted with this, but just to call this out that it is important that we continue to have this constructive dialogue with the authorities that excise hikes at this point in time is the wrong thing to do,” Essaadi said.

According to him, the company’s performance in the first quarter (Q1) of 2023 has been extremely difficult due to the current FX shortages.

The company’s MD thereafter said NB Plc will continue to focus on maintaining its leadership status in the market and will leverage its history, footprint, brand portfolio and people to drive a responsive pricing strategy and prioritize cost and value.

(omayowa@globalfinancialdigest.com; Newsroom: +234 8033 964 138)

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