East African Breweries Plc (EABL) will absorb all the Sh16.7 billion offered by investors in the sale of its corporate bond, boosting its cash levels as it seeks to clear debt obligations.
The listed brewer had targeted to raise Sh11 billion in the first tranche of the Sh20 billion medium term paper, but investors subscribed the offer to the tune of 152.4 percent.
EABL has now taken up its option of absorbing up to Sh6 billion offered beyond the targeted Sh11 billion in the first tranche, in what is referred to as a green-shoe option, leaving it with headroom to borrow an additional Sh3.23 billion in future tranches.
‘In light of this oversubscription, EABL has applied for and on November 12, received approval from the Capital Markets Authority (CMA) to increase the total allotment for the first tranche to accommodate the oversubscription. This increase remains strictly within the Sh20 billion MTN Programme limit previously approved by the CMA,’ said the company in a statement.
EABL had said it will use proceeds of the bond for general business purposes and to repay other borrowings.
Before issuing the new bond, EABL had made an early redemption of a previous five-year paper that had an outstanding amount of Sh11 billion, which was to mature October 2026.
The new five-year corporate bond is paying interest at 11.8 percent, which is cheaper than the 12.25 percent rate on the redeemed bond.
‘In light of this oversubscription, EABL has applied for and on November 12, received approval from the Capital Markets Authority (CMA) to increase the total allotment for the first tranche to accommodate the oversubscription. This increase remains strictly within the Sh20 billion MTN Programme limit previously approved by the CMA,’ said the company in a statement.
EABL had said it will use proceeds of the bond for general business purposes and to repay other borrowings.
Before issuing the new bond, EABL had made an early redemption of a previous five-year paper that had an outstanding amount of Sh11 billion, which was to mature October 2026.
The new five-year corporate bond is paying interest at 11.8 percent, which is cheaper than the 12.25 percent rate on the redeemed bond.