Minority shareholders of PZ Cussons Nigeria Plc (PZCN) have rejected a proposal to convert a N51.79 billion ($34.26 million) intercompany loan into equity, dealing a setback to the company’s financial restructuring plans. The resolution, presented at an Extraordinary General Meeting (EGM) on March 13, 2025, at the Transcorp Hilton Hotel in Abuja, failed to secure the required 75% approval threshold, despite strong support from most minority shareholders.
Thank you for reading this post, don't forget to subscribe!According to the Nigerian Exchange Group, 663 out of 675 minority shareholders voted in favor of the conversion, but opposition from 12 key shareholders with significant holdings ultimately blocked the motion.
Foreign Exchange Woes and Rising Debt
The proposed conversion stemmed from a $40.26 million intercompany loan extended by PZ Cussons (Holdings) Limited (PZCH) in June 2022 to help PZCN manage foreign currency obligations during Nigeria’s forex crisis. However, following the liberalization of the foreign exchange market in June 2023, the sharp depreciation of the naira resulted in a N157.9 billion exchange loss, leading to a post-tax loss of N76 billion and a negative shareholders’ equity position of N27.5 billion for the financial year ending May 31, 2024.
Despite a 34% year-on-year revenue increase for the 2024 fiscal year and a 42% year-on-year growth for the six months ending November 2024, continued naira depreciation pushed the company’s negative net equity further down to N34.5 billion as of November 30, 2024.
Company Response and Future Plans
Speaking on the vote’s outcome, PZCN CEO Dimitris Kostianis expressed appreciation for shareholder engagement and acknowledged the majority shareholder’s efforts to amend the debt conversion terms to protect minority investors while maintaining compliance with Nigeria’s 20% free float requirement.
“We believe the proposed transaction would have provided significant benefits, including reducing forex exposure, strengthening our balance sheet, and freeing up future cash flow for investments. However, we respect the outcome and will continue exploring alternative solutions to restore the company’s financial health,” Kostianis stated.
With the rejection of the debt-to-equity swap, PZ Cussons Nigeria will need to reassess its financial recovery strategy amid ongoing currency volatility and rising operational costs.
Data Headline: PZ Cussons Nigeria Minority Shareholders Block N51.79 Billion Debt-to-Equity Conversion
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