By Modupe Gbadeyanka
Unilever Nigeria Plc has expressed its intention to raise funds through Rights Issue to settle some debts.
However, this is subject to approval of regulatory body and its shareholders at the forthcoming Annual General Meeting (AGM) scheduled to hold on Thursday, May 11, 2017.
In a statement issued on Wednesday, the firm also said it plans to request that the Authorized Share Capital of the company be increased to N5 billion from N3.03 billion by the creation of additional 3.95 billion new ordinary shares of 50 kobo.
The firm will also seek shareholders authorization to apply any outstanding convertible loan, shareholder loan, or other loan facility due to any person, towards payment for any shares subscribed for by such person under the Rights Issue.
In the financial results for the year ended December 31, 2016, Unilever had N20.9 billion outstanding in debt, mainly comprising N15.2 billion intercompany loan, N5 billion commercial bank loan, and N702.7 million facility from the Bank of Industry (BoI).
It is believed that part of the proceeds of the Rights Issue would be used to repay the outstanding commercial bank loans, settle backlogs of trade payables, and for working capital and capital expenditure investments.
Unilever’s trade payable was at record high of N32.5 billion at the end of last year against N22.5 billion in 2015.
The firm obtained an intercompany loan of $59.7 million (N18.81 billion) from Unilever Finance International AG in Q3-16 to clear the backlog of unpaid Dollar-denominated obligations to suppliers and refinance expensive local short term debts.
Unilever Finance International AG is also a member of the Unilever Group.
This latest move by the Unilever Group can be likened to the recent proposed conversion of Diageo’s $95 million loan to its Nigerian subsidiary, Guinness Nigeria Plc into equity stake via Rights Issue.
