PZ Cussons Nigeria Plc has declared its intention to turn a $34.26 million intercompany loan from PZ Cussons Holdings (PZCH), its parent company domiciled in the UK, into stock.
Key Details of the Conversion:
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Debt Conversion Amount: $34.26 million (approximately ₦51.8 billion).
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Share Price for Conversion: ₦23.60 per share, representing an 18% discount to the current market price.
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New Shares Issued: 2,194,716,637 ordinary shares of 50 kobo each.
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Resulting Share Capital Increase: From ₦1.985 billion to ₦3.082 billion.
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Parent Company’s Ownership Stake Post-Conversion: Increase from 73.27% to 82.79%.
The goal of this calculated action is to improve the company’s financial standing in the face of large foreign exchange losses brought on by the devaluation of the naira.
The necessity to lessen the negative effects of foreign exchange volatility—which resulted in an unrealised exchange loss of ₦157.9 billion and a negative shareholders’ equity position of ₦27.5 billion for the fiscal year ending May 31, 2024—led to the decision to convert the debt into equity.
Currency depreciation has reduced the company’s profitability even though it recorded sales increases of 34% and 42% for the full and half fiscal year periods ending May 31, 2024, and November 30, 2024, respectively.
The planned debt-to-equity conversion will be discussed and decided upon by shareholders at an Extraordinary General Meeting (EGM) in Abuja on March 13, 2025.
The business anticipates that this action will improve its net asset position, strengthen its balance sheet, and lessen its vulnerability to additional foreign exchange losses.
Minority shareholders, however, are concerned about the proposed conversion because it will dilute their shares because of the 18% share price reduction.
This comes after PZ Cussons Nigeria’s unsuccessful attempt to delist, in which minority shareholders turned down the buyout offer, resulting in the company’s choice to stay listed on the Nigerian Exchange Limited (NGX).
After the conversion, the $6 million residual loan balance will remain owed to PZ Cussons Holdings at the current advantageous terms, enabling the business to support operating cash flow and keep finance costs under control.
