PZ Cussons Nigeria Converts $34.2 Million Debt to Equity to Strengthen Financial Position
Key Highlights:
• PZ Cussons Nigeria (PZCN) is converting $34.26 million of its shareholder loan into equity.
• The move aims to strengthen its balance sheet and reduce foreign exchange risks.
• The conversion will increase PZ Cussons Holdings’ (PZCH) stake from 73.27% to 82.79%.
• Shareholders will vote on the proposal at an Extraordinary General Meeting on March 13, 2025.
Background: How PZ Cussons Nigeria Got Here
In June 2022, PZ Cussons Holdings Limited (PZCH) provided a $40.26 million loan to its Nigerian subsidiary, PZ Cussons Nigeria (PZCN), to support raw material purchases and operational expenses amid forex challenges.
However, the liberalization of Nigeria’s foreign exchange market in June 2023 led to significant Naira devaluation, causing PZCN to report an unrealized exchange loss of N157.9 billion and a negative shareholders’ equity of N27.5 billion as of May 31, 2024.
Despite revenue growth of 34% and 42% for the full-year and half-year financial periods ending May and November 2024, the persistent depreciation of the Naira pushed the company’s net equity to a negative N34.5 billion as of November 30, 2024.
To counter these challenges, PZCN’s Board resolved to convert $34.26 million of the outstanding loan into equity, reducing foreign currency exposure while minimizing the dilution of minority shareholders.
The Debt-to-Equity Conversion Plan
• Loan Conversion: $34.26 million (₦51.8 billion) will be converted to equity at ₦23.60 per share.
• New Shares: 2.19 billion new ordinary shares (50 kobo each) will be created for PZCH.
• Increased Share Capital: Share capital will rise by ₦1.1 billion.
• Remaining Loan: PZCN will still owe PZCH $6 million post-conversion.
• Regulatory Approval: The conversion requires shareholder approval and clearance from the Securities and Exchange Commission (SEC) before registration on the Nigerian Exchange Limited (NGX).
Impact on Shareholders
Once approved, PZCH’s ownership will increase from 73.27% to 82.79%, while minority shareholders will see reductions in their stakes:
• CardinalStone: 4.91% → 3.16%
• AMCON & Pension Fund Administrators (PFAs): 1.56% → 1.01%
• Other Shareholders: 20.25% → 13.04%
The board argues that this conversion will stabilize the company’s financial position, improve investor confidence, and mitigate forex risks, given the favorable terms of the shareholder loan compared to Nigeria’s high lending rates.
Next Steps: Extraordinary General Meeting
Shareholders will vote on the conversion plan at an Extraordinary General Meeting (EGM) on March 13, 2025, at Transcorp Hilton, Abuja.
If approved, this move could mark a turning point for PZ Cussons Nigeria, reducing its forex liabilities and setting the company on a stronger financial path.
Key Highlights:
• PZ Cussons Nigeria (PZCN) is converting $34.26 million of its shareholder loan into equity.
• The move aims to strengthen its balance sheet and reduce foreign exchange risks.
• The conversion will increase PZ Cussons Holdings’ (PZCH) stake from 73.27% to 82.79%.
• Shareholders will vote on the proposal at an Extraordinary General Meeting on March 13, 2025.
Background: How PZ Cussons Nigeria Got Here
In June 2022, PZ Cussons Holdings Limited (PZCH) provided a $40.26 million loan to its Nigerian subsidiary, PZ Cussons Nigeria (PZCN), to support raw material purchases and operational expenses amid forex challenges.
However, the liberalization of Nigeria’s foreign exchange market in June 2023 led to significant Naira devaluation, causing PZCN to report an unrealized exchange loss of N157.9 billion and a negative shareholders’ equity of N27.5 billion as of May 31, 2024.
Despite revenue growth of 34% and 42% for the full-year and half-year financial periods ending May and November 2024, the persistent depreciation of the Naira pushed the company’s net equity to a negative N34.5 billion as of November 30, 2024.
To counter these challenges, PZCN’s Board resolved to convert $34.26 million of the outstanding loan into equity, reducing foreign currency exposure while minimizing the dilution of minority shareholders.
The Debt-to-Equity Conversion Plan
• Loan Conversion: $34.26 million (₦51.8 billion) will be converted to equity at ₦23.60 per share.
• New Shares: 2.19 billion new ordinary shares (50 kobo each) will be created for PZCH.
• Increased Share Capital: Share capital will rise by ₦1.1 billion.
• Remaining Loan: PZCN will still owe PZCH $6 million post-conversion.
• Regulatory Approval: The conversion requires shareholder approval and clearance from the Securities and Exchange Commission (SEC) before registration on the Nigerian Exchange Limited (NGX).
Impact on Shareholders
Once approved, PZCH’s ownership will increase from 73.27% to 82.79%, while minority shareholders will see reductions in their stakes:
• CardinalStone: 4.91% → 3.16%
• AMCON & Pension Fund Administrators (PFAs): 1.56% → 1.01%
• Other Shareholders: 20.25% → 13.04%
The board argues that this conversion will stabilize the company’s financial position, improve investor confidence, and mitigate forex risks, given the favorable terms of the shareholder loan compared to Nigeria’s high lending rates.
Next Steps: Extraordinary General Meeting
Shareholders will vote on the conversion plan at an Extraordinary General Meeting (EGM) on March 13, 2025, at Transcorp Hilton, Abuja.
If approved, this move could mark a turning point for PZ Cussons Nigeria, reducing its forex liabilities and setting the company on a stronger financial path.