PZ Cussons Nigeria PLC Board of Directors have concluded plans to convert $34.26 million of its outstanding loan into equity.
According to a disclosure signed by Alsec Nominees Limited, the company secretary, and published on the NGX on February 15, 2025, the decision is part of its ongoing plans to strengthen its balance sheet by settling all the outstanding shareholder loan obligations and reducing exposure to foreign currency fluctuations.
PZ Cussons Holdings Limited (PZCH) loaned $40.26 million to PZ Cussons Nigeria PLC (PZCN) in June 2022, 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, which negatively impacted PZCN’s financial results and led to a rise in its foreign currency-denominated loans.
“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.”
‘Post-Conversion, a remaining shareholder loan balance of $6 million will still be payable to PZCH, ” the disclosure reads
In June 2022, PZCH provided a loan of USD 40.26 million to its subsidiary, PZCN, to help the company meet its foreign currency obligations for raw materials and operational expenses.
However, after the foreign exchange market was liberalized in June 2023, the Naira experienced significant devaluation.
This led to an unrealized exchange loss of N157.9 billion and a negative shareholders’ equity of N27.5 billion by May 31, 2024. Despite these financial challenges, PZCN demonstrated revenue growth, achieving increases of 34% and 42% year-on-year for the full and half financial year periods ended 31 May 2024 and 30 November 2024 respectively. Nevertheless,
However, the ongoing depreciation of the Naira continued to negatively affect profits, pushing net equity further into the red, reaching N34.5 billion as of the latest financial results on November 30, 2024.
