GUINNESS Ghana Breweries Limited (GGBL), a lead beverage producing company in the country, has launched a rights issue seeking to raise GH#¢70million, out of which more than half will go into servicing the company’s trade and interest bearing debt and investment in capital expenditure.
The offer which is renounceable and limited to GGBL’s existing shareholders as of September 30, 2011, is issuing about 46.67 million shares at GH#¢1.50 per share.
Per the offer, every one new share will be equated to 3.5287 existing shares held as of September 30, 2011.
The Managing Director of GGBL, Mr Ekumife Okoli, explained during a media launch in Accra that the rights issue was part of the company’s strategies to position the company to take advantage of the robust nature of the country’s economy.
“Ghana is going through a very strong economic environment and growth in the beverage industry is normally linked to growth in the economic. “We at Guinness are, therefore, positioning the company to reap from that growth,” Mr Okoli said.
According to the Finance Director of GGBL, Mr Rob Pilkington, GH¢40 million of the expected GH¢70million to be raised from the issue will be used to “reduce GGBL’s trade and interest bearing debt and invest in capital expenditure in order to take advantage of the opportunities Guinness sees in Ghana.”
The company’s trade bearing debt as of June this year stood at GH¢60million, an amount the finance director said was mainly as a result of the devaluation of the Cedi in 2009 “which had a major impact on our interest bearing.”
He was, however, optimistic that the current position taken by the company will help clear the debt and pave the way for GGBL to reap fully from the current economic growth.
But should the offer not be successful, Mr Pilkington said “the management team of the company will reconvene to find ways to service the debt.”
“We had even serviced it downward using other methods but we realise that the debt was now impacting negatively on our profit and not allowing the company to invest, hence the resort to the renounceable rights issue,” he added.
The Managing Director was confident that GGBL’s strong brands built over the years would help make the offer successful
The offer, which has IC Securities as the financial advisors and sponsoring brokers, will run till November 14.
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