Guinness Nigeria in fresh trouble over debt

Guinness Nigeria is in fresh trouble over debt of $23 million loan.

OnyxNews Nigeria reports that Guinness Nigeria Plc is struggling to refinance a foreign-currency loan and trim costs following a shortage of dollars in Africa’s largest economy.

Stanley Njoroge, finance and strategy director, said on an investor call in Lagos on Friday that Diageo Plc’s Nigeria unit is weighing options to manage a $23 million debt as a lack of liquidity in the local foreign-exchange market has made it so difficult to refinance.

He said, “We will want to refinance it but there is no foreign currency in the market at the moment.”

According to a source, the brewer of Guinness Stout is looking to roll over the loan which matures in May 2021, but is yet to decide whether to keep it as a dollar debt or convert to a local-currency loan.

Nigeria’s second largest brewer’s outstanding debt increased 16% to 23.2 billion naira ($60 million) as of June compared with a year ago, while finance costs rose 74% to 4.5 billion naira.

Nigerian companies are struggling to access the greenback after a slump in oil prices reduced export earnings, putting pressure on the central bank’s capacity to meet dollar obligations to investors and businesses. “Foreign exchange is a big concern for us,” Njoroge added.

According to its filing on the Nigerian Stock Exchange on Friday, Guinness Nigeria made a net loss of 12.6 billion naira for the full year through June compared with a gain of 5.5 billion naira a year ago. Revenue reduced by 21% to 104.4 billion naira.

The company will prioritize stout, spirit and malt brands in 2020 and focus less on lager as it aims to grow the business and cushion the impact of the deadly coronavirus pandemic on operations, Njoroge explained.

“We don’t have the right price in lager,” he said.