28.2 C
Lagos
Sunday, February 25, 2024

Cadbury to Swap Dollar Loans From Parent Firm to Equity

Must read

spot_img
- Advertisement -
Listen now

Cadbury Nigeria Plc plans to convert foreign-currency loans from parent Cadbury Schweppes Overseas Ltd. into equity to cut higher financing costs caused by the devaluation of the naira.

The beverage and confectionery company will seek shareholder approval on Feb. 8 to convert an outstanding $7.7 million, according to a filing to the Nigerian Exchange.

The debt-to-equity conversion “will help reduce the company’s exposure to foreign-exchange risk and its impact on earnings,” Cadbury said. “It will reduce finance costs and lead to improved profitability.”

The company borrowed $23 million from the unit of Mondelez International Inc over the past three years and has struggled to make interest payments due to an acute dollar shortage in Nigeria.

Its interest obligations blew up after a naira devaluation last year, resulting in an unrealized exchange loss of 20.6 billion naira and after-tax loss of 10.2 billion as of September, the company said.

It cleared some of the loan, but is left with $7.7 million, for which it’s expecting 13.5 billion naira of foreign-exchange losses in 2023, it said.



Get More of our proprietary news and analysis as MoneyCentral is now on WhatsApp Channels 🚀 Follow the MoneyCentral Nigeria channel on WhatsApp: Click here!

- Advertisement -

More articles

LEAVE A REPLY

Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.

- Advertisement -spot_img

Latest article