The Nigerian Exchange Limited (NGX) has admitted 402,082,657 ordinary shares of 50 Kobo each of Cadbury Nigeria Plc on its platform. This was revealed in NGX’s weekly report obtained by Nairametrics.
According to the report, these additional shares stem from Cadbury Nigeria’s conversion of an intercompany loan worth N7,036,446,501.26 into equity. The official statement from NGX reads:
“Trading Licence Holders are hereby notified that an 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, Cadbury’s total issued and fully paid-up shares has now increased from 1,878,201,962 to 2,280,284,619 ordinary shares of 50 Kobo each.”
Shareholders Approve Conversion
Cadbury Nigeria’s Shareholders recently approved converting the intercompany loan into equity. This conversion allocated 402,082,657 ordinary shares to Cadbury Schweppes Overseas for 50 kobo each. Each new share is equivalent in status to existing shares and was valued at N17.50 per share, reflecting Cadbury Nigeria’s share price at the close of trading on December 27, 2023.
The conversion involved Cadbury Nigeria restructuring its capital by converting an intercompany loan of $7.718 million (equivalent to N7.036 billion) owed to Cadbury Schweppes Overseas Limited into equity.
Strategic Restructuring
This strategic move appears to respond to Cadbury Nigeria’s recent financial challenges. According to the company’s unaudited financial results for the 2023 fiscal year, Cadbury Nigeria recorded a post-tax loss of N27.633 billion, primarily due to a significant foreign exchange loss of N36.933 billion. This led to negative retained earnings of N19.906 billion and a decline in shareholders’ funds to a negative N15.081 billion from a positive N8.478 billion at the end of 2022.
Despite these challenges, Cadbury Nigeria showed strong topline and midline performance. The company’s gross profit increased by 130.4% year-on-year to N17.79 billion, and its operating profit surged by 4,226% year-on-year to N8.397 billion, indicating robust profit margins.
Financial Implications
The conversion of the intercompany loan to equity aims to address several critical financial issues. This conversion could eliminate exchange losses on intercompany loans, reduce interest expenses, and lower overall debt levels, 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). The company began the year with a share price of N19.00 but lost 14.5% of its valuation.
Cadbury Nigeria’s move to convert debt to equity demonstrates a strategic effort to stabilize its financial structure and improve investor confidence amidst challenging economic conditions.
