UAC of Nigeria (UACN) Investor update summary

Strategic rationale and acquisition overview

• Acquisition of Chi Limited (CHI) aligns with the strategy to build a house of scalable quality brands in the food and beverage sector, expanding presence in Nigeria's consumer goods market and leveraging strong management, technology, and risk management foundations.

• CHI is a leading Nigerian food and beverage company with over 45 years of heritage, strong brands (Chivita, Hollandia, SuperBite, Beefie), and top-two market positions in juices, dairy, and snacks, supported by nationwide distribution.

• The acquisition was timed to capitalize on favorable market valuations and recent Nigerian economic reforms, including FX and energy reforms, fuel subsidy removal, exchange rate unification, and minimum wage increase, which are improving business sentiment and macroeconomic indicators.

• The transaction was valued at NGN 182.4 billion, funded through a mix of equity (17%) and debt (83%), with a USD bridge loan and planned refinancing in naira, supported by robust legal, tax, and financial advisory.

• Acquisition increases group revenue 3.2x to NGN 717 billion and EBITDA 2.7x to NGN 67 billion, with significant market share gains in key segments.

Deal structure, financing, and integration

• Acquisition executed via a 100% owned SPV, UAC Food and Beverage Company Limited, to ring-fence obligations and streamline financing.

• Debt funding included a USD bridge facility (SOFR +5.5%, 12-month tenor), fully hedged against FX risk, with a planned transition to long-term naira debt via term loans and a registered NGN 150 billion bond program.

• The term loan features deferred principal payments to support integration and cash flow stability; UAC maintains an investment-grade credit profile.

• Chi will operate as a standalone subsidiary, fully consolidated into group results, with no immediate plans for staff changes or integration with other F&B units.

• UAC leverages robust technology platforms (Microsoft 365, SAP S/4HANA) and established management practices for performance tracking and risk management.

Value creation, risk management, and operational focus

• Key value drivers are margin improvement (targeting 15% by Q4 next year), deleveraging (reducing debt from 2.4x to 1.5x EBITDA), and working capital optimization.

• Margin improvement will be achieved through SKU-level reviews, pricing discipline, and operational efficiencies, not just price increases.

• Working capital release is expected by reducing inventory days from 221 to closer to 100–120, potentially freeing up NGN 40 billion per 30-day reduction.

• Asset disposals of non-core holdings are planned to free up management focus and support deleveraging, with timing dependent on market conditions.

• FX risk is managed through hedging, replacement cost pricing, and treasury discipline, with a gradual shift toward local sourcing of raw materials; all production remains domestic.