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Shareholders Reject PZ Cussons $34.3m Debt-to-Equity Proposal

PZ Cussons

Plans by the board of carry out a debt-to-equity conversion exercise have again been frustrated by minority shareholders.

In a notice to the Nigerian Exchange (NGX) Limited over the week, the company said the small investors kicked against the conversion of about N34.3 million, approximately N51.8 billion, debt to equities of the organisation.

It was disclosed that at an Extraordinary General Meeting (EGM) held on March 13, 2025, in Abuja for an approval to implement the proposal, the board could not secure the approval threshold, frustrating the plan.

PZ Cussons owes PZ Cussons (Holdings) Limited about $34.3 million and the debt-to-equity exercise was to resolve challenges stemming from Nigeria’s currency devaluation and historical foreign exchange (FX) liquidity challenges.

Recall that in June 2022, PZCH gave its Nigerian subsidiary a loan of $40.26 million to settle foreign currency payables for raw materials and operational costs due to the ongoing forex scarcity.

Following the liberalisation of the foreign exchange market in June 2023 and subsequent Naira devaluation, the FX 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 May 31, 2024.

Despite strong operational performance, with 34 per cent and 42 per cent year-on-year revenue growth for the periods ended May 31, 2024, and November 30, 2024, respectively, continued Naira depreciation has further eroded operational profits, worsening the negative net equity position to N34.5 billion as of November 30, 2024.

The chief executive of PZ Cussons, Mr Dimitris Kostianis, said, “We would like to thank our shareholders for participating in the EGM and for their active engagement in the process.

“As a response to shareholder feedback received during the meeting, the majority shareholder 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 per cent 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 per cent 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.

“The board of PZCN remains committed to building on the strong operational growth we have seen in H1 of FY25, exploring alternative mechanisms for restoring our net assets to a positive position and to working closely with our shareholders and the broader stakeholder ecosystem during this process.”

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