By Dipo Olowookere
Leading brewery firm in the country, Nigerian Breweries Plc, has announced its intention to raise about N45 billion from the local debt market.
In a disclosure to the investing community on Friday, the company, which is struggling with the new excise duty introduced by federal government some months ago, said it wants to get the fresh capital from the sale of commercial paper.
It stated that subscription for the CP programme, coming in Series 5 and 6, will open on Monday, February 3, 2020.
Nigerian Breweries further disclosed that while the Series 5 would be for a tenor of 180 days, Series 6 would be for 270 days and both will support its short-term funding needs.
“Nigerian Breweries Plc is pleased to inform the Nigerian Stock Exchange (NSE) and the investing public of the continuation of its Commercial Paper (CP) programme with the launch of Series 5 and 6 of the programme which opens on February 3, 2020.
“While Series 5 would be for a tenor of 180 days, Series 6 would be for 270 days, and the aim is to raise up to N45 billion to support the company’s short terms funding needs,” the notice said.
The firm also said, “In addition to providing an opportunity for non-equity investors to invest in the company, the CP programme continues to support the company’s cost management initiatives with the overall aim of reducing its cost of fund. The CP also serves as an additional source of funding for the company.”
Recall that in 2019, Nigerian Breweries successfully concluded the Series 1 to 4 of its renewed N100 billion CP programme.
Business Post reports that a commercial paper is a debt instrument issued by companies to raise funds to meet their short-term obligations. The maturity is usually not beyond 270 days.
The recent decline in treasury bills and bond rates has given big corporations the opportunity to raise fresh capital at cheap interest rates unlike when rates were as high as 14 percent and above.
Adedapo Adesanya