Guinness launches GH¢180m rights issue

Guinness Ghana Breweries Limited (GGBL) has launched a GH¢180 million renounceable rights issue to among other things optimise its capital structure to improve its financial and operational flexibility. 

The objective of the transaction is to return GGBL to an optimal capital structure, reduce the interest burden on GGBL, provide GGBL with the financial flexibility to invest in future value and creating opportunities to return GGBL to a position where it can pay dividends.

Following the rights issue of GH¢70 million in November 2011, the company successfully reduced its outstanding net debt from GH¢104.9 million as of June 2011 to GH¢5.6 million as of June 2012. 

Investment

However, over the past three years, the GGBL has invested significantly in capital expenditure, including increasing the capacity of the Kumasi brewery, to install spirits blending and bottling capability and to redesign the Malta Guinness bottle.  These operational initiatives have been funded primarily on the back of indebtedness to certain entities. 

Challenges

The Managing Director of GGBL, Mr Francis Agbonlahor, said “The macro-economic backdrop has increased the burden of the debt financing with market interest rates having increased significantly, as well as putting pressure on the operating performance of the business.  

“We are, however, confident the injection of GH¢180 million will give shareholders, the opportunity to contribute to GGBL's future while enabling the company to reduce its debt levels, increase its profitability and enable us to maintain the leading position in Ghana” he said.