PZ Cussons Nigeria PLC (PZCN), a leading consumer goods company, has announced plans to convert a portion of its outstanding shareholder loan into equity. This move aims to address the company's negative equity position, which has been impacted by foreign exchange fluctuations.
According to a statement by the company, PZCN's parent company, PZ Cussons (Holdings) Limited, advanced an intercompany loan of $40.26 million to PZCN in June 2022. The loan was intended to help settle outstanding foreign currency payables related to raw material imports and operational costs.
P Cussons Nigeria Nigeria PLC (PZCN), a leading consumer goods company, has announced plans to convert a portion of its outstanding shareholder loan into equity. This move aims to address the company's negative equity position, which has been impacted by foreign exchange fluctuations.
However, the liberalization of the foreign exchange market in June 2023 and the subsequent devaluation of the Naira have had a significant impact on PZCN's financial results. The company reported an unrealized exchange loss of ₦157.9 billion, a loss after tax of ₦76.0 billion, and a negative shareholders' equity position of ₦27.5 billion for the financial year ended May 31, 2024.
To address this challenge, the company's board of directors has approved the conversion of ₦51,795,312,646.721 ($34.26 million) of the outstanding shareholder loan into equity. This move is expected to strengthen PZCN's balance sheet, reduce its exposure to foreign exchange risks, and support future growth.
The remaining shareholder loan balance of USD6 million will remain as a loan payable to PZ Cussons (Holdings) Limited, with favorable terms that will allow PZCN to maintain manageable financing costs while supporting its operational cash flow.
Subject to the approval of shareholders, the Board will seek the approval of the Securities and Exchange Commission (“SEC”) for the Conversion and registration of the new shares to be issued to PZCH, in line with Rule 279 (5) of SEC Rules. Following receipt of SECapproval, the additional shares will be allotted to PZCH and listed on the floor of the Nigerian Exchange Limited.
However, the liberalization of the foreign exchange market in June 2023 and the subsequent devaluation of the Naira have had a significant impact on PZCN's financial results. The company reported an unrealized exchange loss of ₦157.9 billion, a loss after tax of ₦76.0 billion, and a negative shareholders' equity position of ₦27.5 billion for the financial year ended May 31, 2024.
To address this challenge, the company's board of directors has approved the conversion of ₦51,795,312,646.721 ($34.26 million) of the outstanding shareholder loan into equity. This move is expected to strengthen PZCN's balance sheet, reduce its exposure to foreign exchange risks, and support future growth.
PZ Cussons Nigeria Nigeria PLC (PZCN), a leading consumer goods company, has announced plans to convert a portion of its outstanding shareholder loan into equity. This move aims to address the company's negative equity position, which has been impacted by foreign exchange fluctuations.
However, the liberalization of the foreign exchange market in June 2023 and the subsequent devaluation of the Naira have had a significant impact on PZCN's financial results. The company reported an unrealized exchange loss of ₦157.9 billion, a loss after tax of ₦76.0 billion, and a negative shareholders' equity position of ₦27.5 billion for the financial year ended May 31, 2024.
To address this challenge, the company's board of directors has approved the conversion of ₦51,795,312,646.721 ($34.26 million) of the outstanding shareholder loan into equity. This move is expected to strengthen PZCN's balance sheet, reduce its exposure to foreign exchange risks, and support future growth.
The remaining shareholder loan balance of USD6 million will remain as a loan payable to PZ Cussons (Holdings) Limited, with favorable terms that will allow PZCN to maintain manageable financing costs while supporting its operational cash flow.
Subject to the approval of shareholders, the Board will seek the approval of the Securities and Exchange Commission (“SEC”) for the Conversion and registration of the new shares to be issued to PZCH, in line with Rule 279 (5) of SEC Rules. Following receipt of SECapproval, the additional shares will be allotted to PZCH and listed on the floor of the Nigerian Exchange Limited.
This will entail the conversion of a portion of the outstanding shareholder loan amounting to ₦51,795,312,646.721 to equity, at an agreed price of ₦23.60 per share (the “Conversion Price”), which was the share price of the
Company as at close of trading on 12 February 2025, the date before the Board meeting to duly consider and resolve to recommend the Conversion for approval by the shareholders.
In consideration for the Conversion, PZCN will issue additional 2,194,716,637 ordinary shares of 50 kobo each to PZCH. The Company’s share capital will be increased by ₦1,097,358,318.50 through the creation of 2,194,716,637 ordinary shares of 50 kobo each to accommodate the issuance of the new shares to be allotted to PZCH. The new shares will rank pari passu with all the existing shares in the Company’s share capital.
The remaining shareholder loan balance of USD6 million will remain as a loan payable to PZ Cussons (Holdings) Limited, with favorable terms that will allow PZCN to maintain manageable financing costs while supporting its operational cash flow.
Subject to the approval of shareholders, the Board will seek the approval of the Securities and Exchange Commission (“SEC”) for the Conversion and registration of the new shares to be issued to PZCH, in line with Rule 279 (5) of SEC Rules. Following receipt of SECapproval, the additional shares will be allotted to PZCH and listed on the floor of the Nigerian Exchange Limited.
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