Debt for Equity: Cadbury Slides as Coy Lists More Shares
Equities investors reacted, albeit, with mild selloffs on Cadbury Nigeria Plc following the creation of additional shares on the Nigerian Exchange. Additional 402,082,657 ordinary shares of 50 Kobo each per share of Cadbury Nigeria Plc were listed on the official list of Nigerian Exchange Ltd
Some of the fast moving consumer goods company’s shareholders reacted negatively with mild sell down in their interest. Details from the Exchange showed that share price declined to N16.25 on Friday as investors took quick exits amidst ongoing downturn in the local bourse.
Cadbury Nigeria PLC market valuation then declined to N37.054 billion, according to data from the Nigerian Exchange, 4.41% below its opening value.
The new shares of the company that were listed on arose from Cadbury Nigeria Plc’s conversion of N7,036,446,501.26 intercompany loan to equity, regulator confirmed in an update.
“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,” the regulator said.
MarketForces Africa reported that the inability of the consumer goods company to settle its FX obligation to its majority shareholders necessitate the need for debt for equity conversion.
The devaluation of the naira has weakened Cadbury Nigeria financial muscle to pay its parent foreign currency debts as exchange rate fluctuate.
In Q1-2024, foreign exchange loss damaged Cadbury Nigeria Plc financial its latest unaudited report showed. The consume good company posted net loss of more than N7 billion in the first three months of operation in the current year as result of about N13.4 billion loss sustained due to exposure to foreign currency in the period. Selloffs Provoke Spike in Nigerian Treasury Bills Yield
