Thelma Osatohanmwen
Cadbury Nigeria has announced plans to address its foreign currency challenges by proposing a debt-equity swap of its $7.7 million debt owed to Cadbury Schweppes Overseas Limited.
The move is aimed at deleveraging the company’s balance sheet and reducing exposure to foreign currency risks.
NEWSTODAYNG gathered that Cadbury Nigeria allegedly borrowed $23 million from Cadbury Schweppes to settle third-party loans used for raw material imports and other input costs.
However, persistent foreign currency scarcity and subsequent devaluation of the currency posed challenges in servicing the foreign currency-denominated loans.
Despite repaying $18.6 million of the principal and accrued interest, the company faces an outstanding balance of $7.7 million as at December 31, 2023.
The settlement of a portion of the loan resulted in an estimated foreign exchange loss of ₦13.5 billion.
To address this, the company’s board proposed the conversion of the outstanding debt into equity, creating 402,082,657 shares at N17.50 per share.
This move is set to increase Cadbury Schweppes’ stake from 74.97 percent to 79.39 percent, while other shareholders’ combined stake would reduce from 25.03 percent to 20.61 percent.
Shareholders are expected to vote on the proposed debt-equity swap at an extraordinary meeting (EGM) on February 8, 2024, before seeking approval from the Securities and Exchange Commission (SEC).