The Nigerian Exchange Limited (NGX) has admitted additional 402,082,657 ordinary shares of 50 Kobo each per share of Cadbury Nigeria Plc on its platform.
This was contained in the NGX’s weekly report seen by Nairametrics.
According to the report, the additional shares listed on NGX arose from Cadbury’s conversion of N7,036,446,501.26 intercompany loan to equity.
The statement read:
“Trading Licence Holders are hereby notified that additional 402,082,657 ordinary shares of 50 Kobo each per share of Cadbury Nigeria Plc (Cadbury or the Company) were on Thursday, 16 May 2024, listed on the Daily Official List of Nigerian Exchange Limited (NGX).
The additional shares listed on NGX arose from Cadbury’s Conversion of N7,036,446,501.26 Intercompany Loan to Equity.
With this listing of the additional 402,082,657 ordinary shares, the total issued and fully paid-up shares of Cadbury has now increased from 1,878,201,962 to 2,280,284,619 ordinary shares of 50 Kobo each.”
Shareholders of Cadbury Nigeria recently approved the conversion of an intercompany loan into equity by allotting 402,082,657 ordinary shares to Cadbury Schweppes Overseas at a price of 50 kobo each.
Each share ranked pari passu with existing ordinary shares and was priced at N17.50 per share, reflecting the company’s share price at the close of trading on December 27, 2023.
The company resolved to convert its intercompany loan of $7.718 million, equivalent to N7.036 billion, owed to Cadbury Schweppes Overseas Limited into equity.
This strategic restructuring of Cadbury Nigeria’s capital structure appears to be a response to its recent financial performance. According to the company’s unaudited financial results for the 2023 fiscal year, Cadbury Nigeria recorded a post-tax loss of N27.633 billion, largely due to a significant foreign exchange loss of N36.933 billion.
This substantial loss has led to negative retained earnings of N19.906 billion, and shareholders’ funds have declined to a negative N15.081 billion from a positive N8.478 billion at the end of 2022. Despite these challenges, the company showed strong topline and midline performance, with gross profit increasing by 130.4% year-on-year to N17.79 billion, and operating profit surging by 4,226% year-on-year to N8.397 billion, indicating robust profit margins.
Given these financial vulnerabilities, converting the intercompany loan to equity could address several critical issues. It has the potential to eliminate exchange losses on intercompany loans, reduce interest expenses, and lower overall debt levels, thereby strengthening the company’s financial position.
Cadbury Nigeria closed its last trading day on Friday, May 17, 2024, at N16.25 per share on the Nigerian Stock Exchange (NGX). Cadbury began the year with a share price of N19.00 but has since lost 14.5% off the price valuation.
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