GBL Board Gets Shareholders' Nod

...to Restructure Company

Ghana BREWERIES Limited (GBL) ended its extraordinary meeting at Miklin Hotel, Kumasi last Tuesday with a mandate from the shareholders for an extensive restructuring exercise to be carried out, to put the alcohol and beverages producer on a sounder road to profitability.

Four special resolutions passed by the shareholders entitled the company to take steps including increasing its authorised share capital, issuing a rights issue, and converting a zero coupon convertible bond held by Heineken International BV (the major shareholder) into equity.

Other steps given the green light by the shareholders are the conversion of part of the billion worth of preference shares (outstanding) held by the Social Security and National Insurance Trust (SSNIT), in ordinary shares as the write-off of the deficit on the company's income surplus account through a reduction of the stated capital.

Recounting reasons for the capital restructuring exercise, Mr. Martin Eson-Benjamin, chairman of the GBL Board said rising operating costs and fierce competitive pressures on GBL brands in the market "contributed to GBL's inability to benefit from the modest growth of 2.5 which the industry recorded."

The consequences of those developments were a weakened cash-flow, a higher incidence of overdraft and a huge debt-financing burden.

According to him, unedited results for last year indicated that GBL turn-over grew by 24%, compared to 2001 as a result of higher volumes, better product mix and the price hikes in October last year. In spite of the significant operating profit of ?6.4billion due mainly to massive exchange losses of ?7.2billion and an interest burden of ?9.4billion.

"Benefits of the extensive restructuring exercise approved by the shareholders last Tuesday," Mr. Eson-Benjamin said "will include drastic reduction of interest on back overdraft, considerable reduction in foreign exchange risk, and the ability of GBL to implement the needed capital expenditures to upgrade and modernise operations."

GBL directors at the Tuesday extraordinary general meeting included Mr. Segun Adebanji (Managing); Dr. Sir Kwame Donkoh Fordwor; Mr. Ishmael Yamson; Mr. E.M. Boye, Mrs. Door Platenega, Mr. Clement Nouwens and Mrs. Ron Sierhuis.