PZ Cussons’ Minority Shareholders Disapprove $34.3m Loan Conversion To Equity

PZ Cussons Nigeria (PZCN) Plc stated that its minority shareholders have voted not to approve the conversion of $34.265 million (equivalent to N51.795 billion) of the outstanding intercompany loan amount owed by the Company to PZ Cussons (Holdings) Limited into equity.

The decision was made at PZCN’s Extraordinary General Meeting (EGM) held in 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.

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 $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 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.

Speaking on the outcome of the EGM, the chief executive officer of the Company Dimitris Kostianis said, “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.”

He noted that “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.”

He added, “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.”

Kostianis emphasised that “the Board of PZCN remains committed to building on the strong operational growth we have seen in H1 of full year 2025, 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.”