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 management, technology, and risk management strengths.

• 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, with nationwide distribution.

• The acquisition was timed to capitalize on favorable market valuations and recent Nigerian economic reforms, including fuel subsidy removal, exchange rate unification, and minimum wage increase, with optimism for improved macroeconomic indicators.

• The transaction was valued at ₦182.4 billion, funded through a mix of equity (17%) and debt (83%), with a fully hedged USD bridge facility and plans for long-term naira refinancing.

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

Financing structure and integration

• Acquisition executed via a 100% owned SPV, funded 17% by equity and 83% by debt, with a 12-month USD bridge facility at SOFR +5.5%.

• Refinancing into longer-tenor naira debt is planned, using a mix of term loans and a registered ₦150 billion bond program.

• The bridge loan is fully hedged, with no intention to retain USD exposure post-refinancing; expected naira interest rates are 18–19%.

• No significant management or staff changes are planned post-acquisition, aside from the return of seconded Coca-Cola executives; strong management teams at both UAC and CHI.

• CHI will operate as a standalone entity within the group, with future integration decisions pending.

Value creation and operational focus

• Immediate focus is on margin improvement, targeting a minimum 15% margin by Q4 next year, leveraging SKU-level reviews and operational efficiencies.

• Working capital optimization is a priority, aiming to reduce CHI's inventory holding from 221 days toward 100–120 days, potentially releasing ₦40 billion per 30-day reduction.

• Deleveraging will be driven by free cash flow, margin gains, and divestment of non-core assets, with no plans for equity raises.

• Asset disposals will focus on freeing management time and maximizing value, with identified non-core minority positions to be sold over time.

• Export growth is an opportunity, but margin improvement remains the top priority.