Ghana Breweries Limited (GBL) would hold an Extraordinary General Meeting on Tuesday to seek shareholders' approval to write off the deficit on the income surplus account through a reduction of the stated capital of 74.4 billion cedis.

Mr Clement Nouwens, Financial Director of GBL, said this in Accra when he briefed Financial Journalists on the Company's operations and the new initiatives being engineered to revitalise the company.

The meeting would also address an increase in GBL's authorised share capital and convert the Social Security and National Insurance Trust's (SSNIT) outstanding preference shares into ordinary shares.

The company has a deficit on its income surplus account of 40.6 billion cedis making it difficult for dividends to be declared.

The amount would be raised through the authorisation of 400 million ordinary shares to be issued after the meeting gives approval.

Explaining why the company must undertake the capital restructuring exercise, Mr Nouwens mentioned the huge debt service payment of 9.4 billion cedis while suffering an exchange rate loss of 7.2 billion cedis last year.

"The exchange losses were attributable to the impact of the 35 per cent depreciation of the Cedi, especially against the Euro during the year," he said.

"The increase in energy and water tariffs also resulted in higher costs for the company;" he said.

Mr Nouwens said the steep depreciation of the Cedi against the Euro in 2002 resulted in an increase in cost of raw materials, packaging materials and spare parts.

He welcomed the injection of five million Euros by Heineken International, a major shareholder, for capital restructuring and the decision to convert its 10.6 billion Zero Coupon Convertible Bond into shares.

"This is very significant, since this will reverse the weak capital structure of the company, thereby reducing foreign exchange exposure and eliminate the high interest burden."

He said SSNIT, a preference shareholder, has also agreed to convert its preference shares valued at 42 billion cedis into ordinary shares under the Capital Reduction Scheme.

Mr Nouwens urged other shareholders to maintain their effective shareholding in GBL by fully subscribing for their rights.

GBL Management would, on the approval of the meeting, authorise the issue of 400 million new shares to all existing shareholders of the company on the same terms and conditions according to the number of shares they currently hold in the company.

GBL is a merger of Kumasi Brewery Limited and the former ABC Brewery Limited and was created in 1998.