Shareholders of Cadbury Nigeria Plc have approved the conversion of an outstanding intercompany loan of $7.718 million (N7.036 billion) owed to its majority shareholder, Cadbury Schweppes Overseas Limited, to equity.
Shareholders also approved the company’s proposal for an increase of its share capital to N1.14 billion from N939.1 million.
The shareholders gave the nod at an Extraordinary General Meeting (EGM) in Lagos.
Cadbury Schweppes Overseas Limited, an entity currently owned by Mondel–z International Inc, holds a 74.97 percent stake in Cadbury Nigeria, while the remaining shares are held by a diverse group of indigenous, individual, and institutional investors.
Cadbury Nigeria had earlier communicated the proposal to the Nigerian Exchange Limited (NGX) and the investing public.
The shareholders’ approval at the EGM now means that the loan would be converted into equity by the allotment of 402.08 million ordinary shares of 50 kobo each to Cadbury Schweppes Overseas Limited.
In a statement, Cadbury Nigeria’s Managing Director, Oyeyimika Adeboye, attributed this decision to the challenges faced in sourcing US Dollars to repay the company’s foreign currency-denominated loans due to persistent foreign currency scarcity experienced in the country.
According to the company, the move to convert the intercompany loans to equity, which is aimed at deleveraging its balance sheet, will reduce pressure on the company’s cash flows and lead to improved liquidity which could be channeled into better uses by the company or returned to shareholders via dividends.