SEC rejects PZ Cussons minority shareholders buy-out, delisting plans

Nigeria’s Securities and Exchange Commission (SEC) has rejected the buy-out of minority shareholders and delisting plans of PZ Cussons Nigeria Plc.

PZ Cussons noted this in an announcement on the SEC response to PZ Cussons (Holdings) Limited’s offer to acquire shares held by other shareholders of PZ Cussons Nigeria.

PZ Cussons Plc had filed an application with the Securities and Exchange Commission in November 2023 for its no-objection to the proposed scheme.

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The offer was increased from N21 per share to N23 per share as announced on November 9, 2023.

“PZ Cussons Nigeria Plc hereby notifies the Nigerian Exchange Limited (NGX) and the investing public that the Securities and Exchange Commission (SEC) has declined the Company’s request for its No Objection to PZ Cussons (Holdings) Limited’s (the majority shareholder) intention to acquire the shares held by all the other shareholders of PZ Cussons Nigeria Plc at an offer price of N23 per share (the Proposed Transaction),” PZ Cussons Nigeria said in a statement signed its Company Secretary, Olubukola Olonade-Agaga.

PZ Cussons Nigeria further said its Board will communicate further developments to shareholders in due course.

PZ Cussons Plc had ahead of the regulatory rejection of the proposed scheme noted that if it was not able to obtain the approvals it will be required to explore with its creditors, which are primarily members of the PZ Cussons group, ways to address the Company’s negative net asset position and repay or settle outstanding amounts owing to its creditors.

This could include measures such as equity issuance, debt for equity conversion, rights issues, asset sales or similar. Such measures may significantly dilute or otherwise impact existing shareholders.

The company had noted that the depreciation of the Naira and decrease in volumes of approximately 6 percent overall resulted in an operating loss of N73.8 billion for the first 6 months of the 2023/2024 financial year of PZ Cussons.

In addition, PZ Cussons had a foreign exchange loss of N87 billion on its foreign currency-denominated trade obligations, negatively impacting its operating result.

The above operating loss is the key driver of the Company having a negative total equity position of N23.2 billion as of November 30, 2023. As of that day, the Group’s financial liabilities, most of which are denominated in foreign currencies, were at n178.0 billion, while the Total Assets were at N154.8 billion.

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Following the further devaluation of the Naira post November 30, 2023, PZ Cussons expects that the Group will incur further material foreign exchange losses in relation to liabilities denominated in foreign currencies.

These will be reflected in future results and will likely result in a worsening of the current negative net asset position.

“Our payables denominated in foreign currencies have increased significantly in recent years, primarily as a result of our inability to source foreign currency to repay our suppliers and other providers of credit. We have benefited from extended payment terms and other support from our affiliated companies, and as a result, the majority of our trade payables are owed to other members of the PZ Cussons group,” PZ Cussons had said.