Cadbury Board Initiates Sale of 402 Million Shares Due to $7.7 Million Debt Challenge
Cadbury Schweppes Overseas Limited, controlled by Mondelēz International Inc, is a major investor in Cadbury Nigeria with 74.97 percent stake.
In a statement on Tuesday, 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 attendant devaluation of the currency put further pressure on the Company as the Naira value of its foreign currency denominated loans increased significantly,” the company said.
“This resulted in an unrealised exchange loss of ₦20.6 billion and a loss after tax of ₦10.2 billion for the period ended, 30 September 2023.”
Cadbury Nigeria said it has been able to repay $18.6 million of the principal and accrued interest to the investor, leaving an outstanding balance of $7.7 million as of December 31, 2023.
It said the settlement of a portion of the loan, however, crystallised an estimated foreign exchange loss of N13.5 billion.
“In light of the above, the Board of Directors of Cadbury Nigeria has considered various options for settling the outstanding shareholder loan obligation and reducing the Company’s exposure to foreign currency risk,” Cadbury Nigeria said.
“The conversion of the outstanding loan into equity (the “Conversion”) was selected as the optimal option for the Company, as it is expected to deleverage its balance sheet and save the Company further foreign exchange losses.
The board approved the conversion, however, on February 8, 2024, shareholders will vote on the decision at an extraordinary meeting (EGM) — before seeking approval from the Securities and Exchange Commission (SEC).
