More Ruckus as PZ Cussons' Minority Shareholders Reject $34.3m Debt-to-equity Conversion
- PZ Cussons is still in the process of implementing a financial restructuring plan that will address its FX debt
- The company held an extraordinary general meeting over the weekend to secure approval from minority shareholders
- However, this proved impossible due to the countervotes from a key voting bloc
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Legit.ng journalist Ruth Okwumbu-Imafidon has over a decade of experience in business reporting across digital and mainstream media.
There will be further delays in PZ Cussons Nigeria Plc’s financial restructuring plan as the minority shareholders are still against the idea.
PZ Cussons planned to convert its $34.3 million (N51.8 billion) intercompany loan into equity, but the minority shareholders refused on the grounds that it would erode share value.

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Over the weekend, the company held an Extraordinary General Meeting (EGM) in Abuja to reach a decision on the matter, but despite getting the approval of many minority shareholders, a key voting bloc voted against it, making it impossible to reach the required 75% approval.
PZ proposes debt-to-equity conversion
PZ Cussons Nigeria recently unveiled plans to convert a $34.3 million debt owed to the parent company, PZ Cussons Holdings, to equity at the rate of N23.6 per share.
The conversion, being done at an 18% discounted price from the current market value, would increase PZ Cussons Holdings' stake from 73.27% to 82.79%.
At the end of the debt restructuring plans, the issuance of about 2.19 billion new ordinary shares of 50 kobo each will see PZ Cussons Nigeria’s share capital increase from N1.99 billion to N3.08 billion.
How PZ Cussons debt situation worsened
The company proposed the debt conversion to relieve the financial pressures that came with having a dollar-denominated loan in the face of Nigeria’s Foreign exchange issues and naira devaluation, The Guardian reports.
Originally issued in June 2022 by the parent company – PZ Cussons Holdings Limited (PZCH) – the loan was meant to help the Nigerian subsidiary settle foreign currency payables for raw materials and operational costs amid severe forex shortages.

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However, the massive naira depreciation, which started in June 2023 after the liberalisation of the FX market, led to an exchange loss of N157.9 billion, causing PZ Cussons Nigeria to suffer a N76 billion loss after tax, for the financial year ending May 31 2024, despite having a 34% revenue growth for the period.
The further depreciation also negatively affected the company’s equity, leading to a negative net equity of N34.5 billion. It was even rumoured that the company would exit Nigeria.
Minority shareholders refuse restructuring
Following earlier concerns raised by the minority shareholders, the majority shareholders had revised the terms of the debt-to-equity to limit the minority shareholders' dilution, while also ensuring compliance with the 20% free float requirement from the Nigerian Exchange.
The majority shareholders refrained from voting, and even though the majority of the minority shareholders voted in support, a key voting bloc made it impossible to get 75% approval by voting against it.

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Speaking on the outcome of the voting, PZ Cussons Nigeria CEO, Dimitri Kostianis explained that the debt-to-equity conversion would have helped the company strengthen its balance sheet, and free up cash flow to be channelled into other investments that would drive sustainable growth for the company.
He thanked the shareholders for their presence and engagement. Kostianis assured that despite the setback, the board remains committed to finding alternative solutions that will protect the company’s net asset position and achieve long-term financial stability.
Shareholders give reasons for their refusal
In related news, some shareholders expressed fears that the move could cause financial instability, and lead to a forced buyout and/or delisting from the Nigerian Exchange (NGX).
While some agree with the company management that the move would help salvage it from financial distress, there are concerns that it could also erode share value, undermining minority shareholders in the long term, and leading to a buyout.
Speaking on the issue, Mr. Patrick Ajudua, the president of the New Dimension Shareholders Association of Nigeria, warned that the deal does not favour minority investors, and could eventually turn into a sort of ‘enslavement’.
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Proofreading by Nkem Ikeke, copy editor at Legit.ng.
Source: Legit.ng

Ruth Okwumbu (Business Editor) Ruth Okwumbu-Imafidon is a business journalist with over a decade's experience. She holds both a Masters' and B.Sc. degrees Mass Communication from the University of Nigeria, Nsukka, and Delta State University. Before joining Legit.ng, she has worked in reputable media including Nairametrics. She can be reached via ruth.okwumbu@corps.legit.ng

Nkem Ikeke (Copy editor) Nkem Ikeke is currently a copy editor who also writes for the politics and current affairs desk on weekends. She holds a Bachelor of Arts in Mass Communication degree from the University of Nigeria, Nsukka (2010), and has over 10 years of work experience in the media industry (Reporter, News Agency of Nigeria). Email: n.ikeke@corp.legit.ng