EABL seeks Sh11b from bond issue
Capital Markets Authority (CMA) has approved the East African Breweries Ltd (EABL) request to offer medium-term notes worth Sh11 billion, under its medium-term note programme.
The brewer said proceeds from the issue of the notes, after paying all expenses of the issue, will be used by the company to repay certain borrowings taken in the ordinary course of business, provide working capital to the Group across East Africa and refinance certain short term borrowings.
“EABL does not anticipate an increase in debt levels as a result of this issuance,” the notice released by Nairobi Securities Exchange (NSE), states, adding that the issue is restricted, and that no offer will take place outside Kenya.
Fixed interest rate
The notes have a tenor of five years with a fixed interest rate of 12.25 per cent per annum, payable semi-annually in arrears. EABL said minimum subscription will be Sh100,000, in multiples of Sh10,000.
It said the note will be on sale from yesterday (Wednesday) until October 21, with those successful being notified on October 27. The notes will be issued on October 29, and listed on the NSE on November 1.
Last time the company was in the capital markets was 2017, to raise Sh6 billion after raising another Sh5 billion in 2015.
In its full year results ending June, EABL posted a pre-tax profit of Sh10.86 billion, from an improved revenue base of Sh86 billion, equivalent to 15 per cent.
The company engages in the brewery, production, marketing, distribution, and sale of beer, spirits, adult non-alcoholic drinks, and malt as well as barley products in Kenya, Uganda, and Tanzania.
Cash flow
At close of trading yesterday, the number of shares traded stood at 28,200 fetching Sh165, having shed Sh1.75 from the previous day’s Sh166.75.
According to analysts, the company’s debt to equity ratio of 312.1 per cent is considered high, though the debt is well covered by the company’s operating cash flow.
They have also forecast an annual growth rate of 30.43 per cent per year, which is above the market rate of 13.7 per cent.
