PZ Cussons’ shareholders block N51bn debt-to-equity swap

PZ Cussons Nigeria Plc has disclosed that its minority shareholders voted against the conversion of $34.26m (equivalent to N51.79bn) of the outstanding intercompany loan amount owed by the company to its parent company PZ Cussons (Holdings) Limited (“PZCH”) into equity. The decision was made at PZCN’s Extraordinary General Meeting (EGM) held on March 13, 2025 […]

PZ Cussons Nigeria Plc has disclosed that its minority shareholders voted against the conversion of $34.26m (equivalent to N51.79bn) of the outstanding intercompany loan amount owed by the company to its parent company PZ Cussons (Holdings) Limited (“PZCH”) into equity.

The decision was made at PZCN’s Extraordinary General Meeting (EGM) held on March 13, 2025 at the Transcorp Hilton Hotel, Abuja, according to a disclosure to the Nigerian Exchange (NGX) at the weekend.

While there was strong minority shareholder support for the transaction, a significant minority shareholder bloc voted against the transaction and the approval threshold was not met.

The debt conversion was proposed to resolve challenges triggered by Nigeria’s currency devaluation and historical forex liquidity challenges.

It would be recalled that in June 2022, PZCH advanced an intercompany loan of US$40.26 million to help PZCN settle foreign currency obligations for raw materials and operational costs due to the ongoing forex scarcity.

But with the unification of the exchange rate in June 2023 and the naira devaluation, the foreign exchange debt position drove an exchange loss of N157.9 billion, resulting in a N76.0 billion loss after tax and a negative shareholders’ equity position of N27.5 billion for the financial year ended 31 May 2024.

The company observed that depreciation has eroded operational profits despite operational performance with 34% and 42% year-on-year revenue growth for the periods ended 31 May 2024 and 30 November 2024 respectively.

Speaking on the outcome of the EGM, the Chief Executive Officer (CEO) of the company, Dimitris Kostianis, said while there was strong minority shareholders’ support for the transaction, the 75 per cent shareholding vote could not be secured.

He said, “As a response to shareholder feedback received during the meeting, the majority shareholders amended the proposed conversion terms to reduce the level of debt to be converted and increase the conversion price, which would have reduced minority shareholder dilution and also ensured that the company remained compliant with the 20% free float requirement.

“There was very strong minority shareholder support for the transaction, with 663 of the 675 minority shareholders present at the meeting voting in favour. However, the 75% shareholding vote required to approve the resolution was not met, as 12 minority shareholders representing a significant shareholding voted against the resolution.

“In compliance with the law, the majority shareholder did not vote on the resolution.

“We believe that there were strong benefits for the company and shareholders from the proposed transaction. By converting the intercompany loan into equity, the company’s exposure to foreign exchange volatility would have been significantly reduced, our balance sheet would have been strengthened, and future cash flow would have been freed up to be allocated to productive investments that support the company’s profitable and sustainable growth ambitions.

“This would have established the basis for improving shareholder liquidity.”