PZ Cussons Nigeria plans to convert a $34.3 million debt owed to its parent company, PZ Cussons (Holdings), into equity. This will raise the parent company’s stake from 73.27% to 82.79%.
Debt Conversion Details
The $34.26 million loan (about N51.8 billion) will be swapped at N23.60 per share, an 18% discount to the market price. This move will create 2.19 billion new ordinary shares of 50 kobo each.
Once completed, PZ Cussons’ share capital will rise from N1.985 billion to N3.082 billion. Shareholders will vote on the plan at an Extraordinary General Meeting (EGM) on March 13, 2025, in Abuja.
Financial Challenges and FX Losses
In June 2022, PZ Cussons (Holdings) loaned $40.26 million to its Nigerian unit to clear foreign currency debts. However, the Naira’s devaluation in June 2023 caused an N157.9 billion FX loss by May 31, 2024.
Despite growing revenue, forex losses have weakened profits, pushing the company into negative equity. The conversion aims to strengthen the balance sheet and cut foreign exchange risks.
Shareholder Disputes and Delisting Issues
PZ Cussons has clashed with shareholders over its delisting price. Since November 2023, it has tried to exit the Nigerian Exchange (NGX), first offering N23 per share, which was rejected. Even after raising it to N23.60, opposition remained. The Securities and Exchange Commission (SEC) later stepped in.
The company has now paused delisting plans since its market price has hit N27.85, a level it is unwilling to pay for buybacks.
Concerns Over Share Dilution
The discounted share price for the debt swap is likely to spark debates at the EGM. Many fear dilution, which would weaken minority shareholders’ influence.
More importantly, majority shareholders gain shares at an 18% discount, while recent investors who bought at higher prices face immediate losses. This raises concerns about fairness and whether minority investors’ interests are protected.
As the meeting nears, investors will watch closely for its impact on financial stability and market value.
