Consumer goods company, Cadbury Plc, has revealed plans to seek shareholders’ approval to convert a N7.036bn loan from its parent company, Cadbury Schweppes Overseas Limited, to equity.
In an explanatory statement on the proposed debt-to-equity conversion filed with the Nigerian Exchange Limited on Tuesday, the company revealed that between February 2021 and September 2023, Cadbury Schweppes Overseas, loaned $23m to Cadbury Nigeria to help settle outstanding third-party loans which the company had obtained to fund its raw material imports and other input costs.
However, due to scarcity of the foreign currency in the country, the company said that it “Faced challenges with servicing its foreign currency denominated loans. The liberalisation of the foreign exchange market in June 2023 and the attendant devaluation of the currency put further pressure on the Company as the Naira value of its foreign currency-denominated loans increased significantly. This resulted in an unrealised exchange loss of N20.6bn and a loss after tax of N10.2bn for the period ended, 30 September 2023.’’
“Despite these challenges, the company has been able to repay Cadbury Schweppes Overseas, a total of $18.6m of the principal and accrued interest, with an outstanding balance of $7.7m as of 31 December 2023. The settlement of a portion of the loan, however, crystallised an estimated foreign exchange loss of N13.5bn.”
It added that the Board of Directors of Cadbury Nigeria having considered various options for settling the outstanding shareholder loan obligation and reducing the Company’s exposure to foreign currency risk opted for conversion of the outstanding loan into equity.
Following the conversion, Cadbury Schweppes Overseas shareholding will increase from 74.97 per cent to 79.39 per cent while that of other shareholders will decrease from 25.03 per cent to 20.61 per cent.
Hence at the Extra-Ordinary Meeting of the company scheduled for February 8, shareholders will decide on the following resolutions; “That the outstanding intercompany loan of $7,718,118.44 equivalent to N7,036,446,501.26 owed by the Company to Cadbury Schweppes Overseas Limited be converted into equity by the allotment of 402,082,657ordinary shares of 50 kobo each to Cadbury Schweppes Overseas, each share to rank pari passu in all respects with the existing ordinary shares in the capital of the Company, at the price of N17.50 per share, being the share price of the Company as at close of trading on December 27, 2023, and on such other terms as may be agreed by the Directors subject to obtaining relevant regulatory approvals;
“To consider and if thought fit, pass the following sub-joined resolutions as an ordinary resolution: a) the Company’s share capital be increased from N939,100,981 to N1,140,142,309.50 by the creation of 402,082,657 ordinary shares of 50 kobo each, such shares to rank pari passu in all respects with the existing Ordinary Shares in the Capital of the Company.”
Subject to the approval of shareholders, the Board will seek the approval of the Securities and Exchange Commission for the Conversion and registration of the new shares to be issued to Cadbury Schweppes Overseas, in line with Rule 279 (5) of the SEC Rules.
Cadbury Nigeria is a market player in the sugar confectionery, gum and powdered beverages in Nigeria. Cadbury Nigeria operates through three key segments, Confectionery, Powdered Beverages, and Intermediate Cocoa Products.
