The proposed conversion, which was part of a broader financial restructuring plan, required approval from 75 percent of shareholders. However, 12 minority shareholders, representing a significant shareholding, voted against the resolution at an extraordinary general meeting (EGM) held on Thursday in Abuja.
Strong Minority Support, But Insufficient Votes
The conversion proposal received strong support from 663 of the 675 minority shareholders present at the EGM. However, the 12 dissenting votes prevented the company from reaching the 75 percent threshold required for approval. Notably, PZCH, the majority shareholder, did not participate in the voting, as required by law.
In response to shareholder feedback during the meeting, PZCH amended the proposed terms to reduce the level of debt to be converted and increase the conversion price. These changes were intended to minimize minority shareholder dilution and ensure compliance with the 20 percent free float requirement.
CEO Highlights Missed Benefits
Dimitris Kostianis, Chief Executive Officer (CEO) of PZ Cussons Nigeria, expressed disappointment over the outcome, emphasizing the potential benefits of the conversion.
“By converting the intercompany loan into equity, the company’s exposure to foreign exchange volatility would have been significantly reduced, our balance sheet would have been strengthened, and future cash flow would have been freed up for productive investments to support profitable and sustainable growth,” Kostianis said.
He added that the conversion would have also improved shareholder liquidity and established a stronger financial foundation for the company.
Operational Growth Amid FX Challenges
Despite the setback, PZCN reported strong operational performance, with year-on-year revenue growth of 34 percent and 42 percent for the periods ending May 31, 2024, and November 30, 2024, respectively. However, the continued depreciation of the naira has eroded operational profits, worsening the company’s negative net equity position to N34.5 billion as of November 2023.
Commitment to Future Solutions
Kostianis reiterated the board’s commitment to exploring alternative mechanisms to restore the company’s net assets to a positive position.
“We remain committed to building on the strong operational growth seen in the first half of FY25 and to working closely with our shareholders and stakeholders to navigate this process,” he said.
The company also expressed gratitude to shareholders for their active participation and engagement during the EGM.