Diageo Nigeria Unable To Refinance Loan On Dollar Shortage

Diageo Plc’s Nigeria unit said it’s struggling to refinance a foreign-currency loan and trim costs following a shortage of dollars in Africa’s largest economy.

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

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

The brewer of Guinness Stout is looking to roll over the loan which matures in May next year, 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 rose 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 cut 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 said.

Guinness Nigeria made a net loss of 12.6 billion naira for the full year through June compared with a profit of 5.5 billion naira a year ago, according to its filing on the Nigerian Stock Exchange on Friday. Revenue dropped 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 Covid-19 pandemic on operations, Njoroge said.

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

– Bloomberg.