PZ Cussons Minority Shareholders Reject Debt-to-Equity Conversion

PZ Cussons Minority Shareholders Reject Debt-to-Equity Conversion

PZ Cussons Nigeria Plc has officially announced that its minority shareholders have voted not to approve the conversion of US$34,264,544 or equivalent to ₦51,795,312,646.72 of the outstanding intercompany loan amount owed by the company to PZ Cussons (Holdings) Limited (PZCH) into equity.

In its official statement, the consumer goods company said the decision was made at PZCN’s Extraordinary General Meeting (EGM) held on 13th March 2025 at the Transcorp Hilton Hotel, Abuja.

“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”, PZ Cussons said.

The company noted that the debt conversion was proposed to resolve challenges stemming from Nigeria’s currency devaluation and historical forex liquidity challenges.

In June 2022, PZCH advanced an intercompany loan of US$40.26 million to help PZCN 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 foreign exchange debt position drove an exchange loss of ₦157.9 billion, resulting in a ₦76.0 billion loss after tax and a negative shareholders’ equity position of ₦27.5 billion for the financial year ended 31 May 2024.

Despite strong operational performance, PZ Cussons said continued Naira depreciation has further eroded operational profits, worsening the negative net equity position to ₦34.5 billion as of 30 November 2024.

Commenting on the outcome of the EGM, the Chief Executive Officer (CEO) of the Company 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% 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.

“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.” Oando Edges Higher Slightly after Refinery Win