The Nigerian Stock Exchange, NSE, has received the application of Guinness Nigeria’s right issue of N40 billion for approval and listing.
The request to the Nigerian bourse follows shareholders’ approval given on the 24th of January at Guinness’s Extra-ordinary General Meeting (EGM).
NSE who notified dealing members of the application stated that it was received through Guinness’s Stockbroker; Stanbic IBTC Stockbrokers Limited.
According to the NSE, the Rights Issue is offering 684,494,631 Ordinary Shares of 50 Kobo each at N58.00 per share.
Existing shareholders, at this price will thus have the opportunity to buy additional 5 new Ordinary Share for every 11 Ordinary Share held.
At the terms set, Guinness Nigeria looks to raise at least N39,700,688,598 for the purpose of positively impacting the company’s financial performance and strengthen its balance sheet.
The company reported its first annual loss of N2.7 billion, in three decades last year September which further compounded to a loss after tax of 4.7 billion in its half year period ended December 31, 2017.
However, with the rights issue, the company is more certain of raising capital, and also gets to leave control in the hands of existing shareholders, avoid expenses for a public offer, and preserve company image.
Shareholders have the option to either take up the rights to purchase in full, Ignore the rights issue which is usually not recommended giving the fact that such shareholding will be diluted as a result of the extra shares issued or Sell rights to other investors.
Asides the benefits of a rights issue to the company, shareholders who partake automatically get a tax free dividend, and get the opportunity to purchase new shares at a discount to the market price.
As at close of business on Friday the offer represents a 21 percent discount to Friday’s market price of N66.50.