Cadbury Nigeria has taken a significant step to address its financial challenges by announcing plans to sell 402 million shares.
The move comes in response to the company’s inability to settle a $7.7 million (N7.03 billion) debt owed to Cadbury Schweppes Overseas Limited.
Controlled by Mondel–z International Inc, Cadbury Schweppes Overseas Limited holds a substantial 74.97 percent stake in Cadbury Nigeria.
The indebtedness stems from a $23 million loan that Cadbury Nigeria had borrowed from Cadbury Schweppes.
This loan was initially utilized to settle third-party loans, which were obtained to finance raw material imports and other input costs.
In a statement released on Tuesday and submitted to the Nigerian Exchange Limited (NGX), Cadbury Nigeria explained that challenges in servicing the foreign currency-denominated loans arose due to persistent foreign currency scarcity in the country.
The company highlighted the impact of the liberalisation of the foreign exchange market in June 2023, coupled with the devaluation of the currency, which significantly increased the Naira value of its foreign currency-denominated loans.
This unfavourable market condition led to an unrealized exchange loss of ¦ 20.6 billion and a loss after tax of ¦ 10.2 billion for the period ending on September 30, 2023, as stated by Cadbury.
Despite efforts to address the financial strain, Cadbury Nigeria disclosed that it was only able to repay $18.6 million of the principal and accrued interest to the investor.
This leaves an outstanding balance of $7.7 million as of December 31, 2023.
In an attempt to navigate these financial challenges and seek a resolution, Cadbury Nigeria has opted to swap its debt with Cadbury Schweppes Overseas Limited for increased equity through the sale of 402 million shares.
The company aims to strengthen its financial position and ensure sustainable operations in the face of prevailing economic uncertainties.
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