Cardbury Nigeria Plc Shareholders Approve Conversion of Intercompany Loan of $7.72 Million

It has been reported that shareholders of Cadbury Nigeria Plc have approved the conversion of an outstanding intercompany loan of $7.72 million (N7.04 billion) that was owed to its majority, Cadbury Schweppes Overseas Limited, to equity.

This was announced after shareholders approved the move at the Extraordinary General Meeting (EGM) that was held recently in Lagos.

In an explanatory statement on the proposed debt-to-equity conversion filed with the Nigerian Exchange Limited in January, the company revealed that between February 2021 and September 2023, Cadbury Schweppes Overseas, loaned $23 million to Cadbury Nigeria to help settle outstanding third-party loans, which the company had obtained to fund its raw material imports and other input costs, according to the PUNCH.

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Cadbury Nigeria, with the shareholders’ approval at the EGM, said that the loan would be converted into equity by the allotment of 402,082,657 ordinary shares of 50 kobo each to Cadbury Schweppes Overseas Limited.

The Managing Director of Cadbury Nigeria, Oyeyimika Adeboye, attributed the debt-to-equity decision to the challenges faced in sourcing dollars to repay the company’s foreign currency-denominated loans, due to persistent foreign currency scarcity experienced in the country.

Commenting on the development, the Managing Director of Parthian Partners, Oluseye Olusoga, said, “The Cadbury situation is not that bad for local investors. If you owe money, it comes with a fine. That debt could just keep ballooning. So, this is like a cure. So, the question is, how do you keep it from growing again, so it doesn’t become a liability? That was why I said we need to focus on how to get local substitutes and how we export more of what we manufacture.”

Cadbury Schweppes Overseas Limited, an entity currently owned by Mondelēz International Inc., holds a 74.97% stake in Cadbury Nigeria, while the remaining shares are held by a diverse group of indigenous, individual, and institutional investors.

With the conversion, Cadbury Schweppes Overseas shareholding will increase from 74.97% to 79.39%, while that of other shareholders will decrease from 25.03% to 20.61%.