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PZ Cussons Nigeria has announced that minority shareholders voted against the conversion of $34.26 million debt owed to its parent company, PZ Cussons Holdings, into equity.
This information was included in a disclosure signed by the company secretary, Alsec Nominees Limited, and published on the Nigerian Exchange Group (NGX) on March 14, 2024, following PZ Cussons’ Extraordinary General Meeting on March 13.
The disclosure revealed that, although there was notable support among minority shareholders, a significant bloc opposed the conversion.
It noted, “While there was strong minority shareholder support for the transaction, a significant minority shareholder bloc voted against it, and the approval threshold was not met.”
At the meeting, 663 out of 675 minority shareholders voted in favor of the proposal, while 12 significant shareholders opposed it. As a result, the necessary 75% majority to approve the resolution was not achieved.
Backstory
PZ Cussons Nigeria PLC announced the conversion of $34.26 million of its outstanding loan into equity in mid-February 2025, following careful deliberation by its Board of Directors.
- In June 2022, PZ Cussons Holdings Limited (PZCH) loaned $40.26 million to PZ Cussons Nigeria PLC (PZCN) to help cover raw material and operational costs, which were difficult to manage due to currency shortages.
- However, between 2023 and 2024, the Naira experienced significant devaluation, negatively impacting PZCN’s financial results and leading to a rise in its foreign currency-denominated loans.
In response to these challenges, the company’s board decided to strengthen its balance sheet by settling the outstanding shareholder loan obligation and reducing exposure to foreign currency fluctuations.
According to a disclosure signed by Alsec Nominees Limited, the company secretary, and published on the NGX on February 15, 2025, the Board stated:
“After extensive discussions, we have agreed that converting a portion of the outstanding loan, amounting to USD 34.26 million, into equity is the most effective strategy to reduce debt and strengthen the Company’s balance sheet while significantly minimizing the risk of future foreign exchange losses.”
CEO’s recent comments
Reflecting on the outcome of the EGM, CEO Dimitris Kostianis expressed his appreciation to shareholders for their active participation and engagement throughout the process.
He emphasized that, regardless of the voting results, he firmly believes the company would have gained significant advantages from the proposed conversion.
“Converting the intercompany loan into equity would have alleviated our exposure to foreign exchange volatility, allowing us to channel resources into productive investments that align with our goals for profitable and sustainable growth.”
Despite the outcome, Kostianis reassured stakeholders, stating: “The board remains dedicated to capitalizing on the robust operational growth achieved in the first half of FY25.”
He noted their commitment to exploring alternative strategies aimed at restoring the company’s net assets to a positive position.
