PZ Cussons Nigeria Plc is converting a N51.79 billion loan from its UK parent company into equity to strengthen its balance sheet and reduce foreign exchange risk. This move, subject to shareholder approval, aims to restore financial stability amidst ongoing economic challenges in Nigeria.
PZ Cussons Nigeria Plc has announced plans to convert a N51.79 billion loan from its UK-based parent company, PZ Cussons Holdings (PZCH), into equity as part of a financial restructuring effort. The decision, which was approved during a special board meeting on February 13, 2025, will involve the issuance of 2.19 billion new ordinary shares at N23.60 each to PZCH.
This move is aimed at reducing the company’s debt burden and improving its financial standing amidst ongoing economic challenges in Nigeria. PZ Cussons explained that the conversion would strengthen the company’s balance sheet and allow it to allocate future operating cash flows toward more strategic and value-creating opportunities. It will also reduce foreign exchange risk exposure, which has been exacerbated by the depreciation of the naira.
The company’s share capital will rise from N1.99 billion to N3.08 billion following the conversion. While the restructuring is subject to approval at an extraordinary general meeting (EGM) scheduled for March 13, 2025, PZ Cussons believes this action will help restore its net asset position and enhance its financial ratios, potentially improving its creditworthiness.
The loan conversion follows a $40.26 million loan extended by PZCH in June 2022 to settle foreign currency payables. The liberalization of the foreign exchange market and further naira depreciation significantly impacted the company’s financial health, leading to the decision to convert a portion of the loan to equity.
