Cadbury Nigeria has offered to swap its $7.7 million (N7.03 billion) debt owed to Cadbury Schweppes Overseas Limited for more equity.
Cadbury Schweppes Overseas Limited, controlled by Mondelēz International Inc, is a major investor in Cadbury Nigeria with 74.97 percent stake.
The conversion of the $7.7 million debt to equity, according to the company, will result in the creation of 402,082,657 shares. These will be handed to Cadbury Schweppes at N17.50 per share.
In a statement on Tuesday sent to the Nigerian Exchange Limited, NGX, Cadbury Nigeria said it borrowed $23 million from Cadbury Schweppes to settle outstanding third-party loans obtained to fund raw material imports and other input costs.
Cadbury Nigeria said it is facing challenges servicing the foreign currency-denominated loans due to persistent foreign currency scarcity in the country.
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.
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.