Shareholders remain unfazed and unwavering in their opposition to PZ Cussons’ plan to delist from the Nigerian Exchange (NGX). This follows the company’s net loss of N76 billion, resulting in a negative equity of N27.5 billion for the financial year ending May 31, 2024.
Despite the company’s financial challenges, shareholders with vested interests remain strongly opposed to its delisting plans.
“The challenge facing PZ Cussons is not a permanent one; other manufacturing companies have been affected too. Why should they think that leaving the market is the solution?” asked Moses Ibrude, national coordinator of the Independent Shareholders Association of Nigeria (ISAN), in a statement to
BusinessDay.
He continued, “PZ has been a reputable company in Nigeria. Instead of trying to withdraw, they should raise capital from the market. There are ways to address this challenge; we can sit down and discuss it.”
Boniface Okezie, national chairman of the Progressive Shareholders Association, took a harsher stance, accusing the company of a “disingenuous move to engage in capital flight.”
“This company has a high turnover, but because of the Financial Reporting Council’s rules, they have to account for their FX losses, most of which are unrealised. When you look closely, it’s evident they are unwilling to reward investors, and even the parent company seems disinterested in the Nigerian
economy,” he argued.
He noted, “They want to delist not because they’re not making money in Nigeria, but because they want to operate as a private company while paying taxes in Nigeria. It is a disingenuous move to engage in capital flight.”
Pay Shareholders Fairly if You Must Delist
A common sentiment among shareholders is that if the company is intent on delisting, it should increase its offer price. PZ Cussons’ efforts to delist from the NGX have been stalled by the Securities and Exchange Commission (SEC) objection. However, even before the SEC’s decision, shareholders had vehemently opposed the N23 offer price proposed by the majority shareholder, PZ (UK) Holdings.
“If they insist on buying out other minority shareholders, they should offer a fair price and comply with regulatory requirements,” stated Ibrude.
Okezie echoed this view, calling the proposed offer “unacceptable.”
“If they want to delist, they should pay shareholders appropriately. The N23 offer is unacceptable. If shareholders are being generous, we might consider N50 per share and let them proceed,” he added.
“Based on the current market price, shareholders could demand an offer price of N50.”
As of the close of trading on September 3, 2024, PZ Cussons shares were trading at N21, having reached
a year-high of N40 per share in March.
Following the SEC’s rejection of the majority shareholder’s buyout proposal, PZ Cussons’ board of directors announced that the company would explore other options to resolve its negative net asset position. These options, according to the notice, include; “equity issuance, debt-for-equity conversion, rights
issues, asset sales, or similar measures.” The company indicated that these actions could affect shareholders.
Between 2023 and 2024, Nigerian manufacturers have been adversely impacted by the exchange rate devaluation due to their FX-denominated exposures. The substantial FX losses have led to negative margins for many companies, resulting in negative net asset positions.
To address their negative net asset positions, companies like International Breweries have turned to the market to raise capital through rights issues, with Nigerian Breweries also preparing to launch a N599 billion rights issue program.
Efforts to obtain a comment from representatives at PZ Cussons Nigeria were unsuccessful, as no response was received from official sources.
