Hit By N23.2bn Negative Equity, PZ Cussons Considers Selling Nigerian Assets, Others

Hit by a negative net assets position of N23.2bn, PZ Cussons Nigeria Plc said it is under pressure to settle its debt to the core investor, PZ Cussons Group, suppliers and other providers of credit and it may consider selling its assets if minority shareholders frustrate its proposed minority shares buyout.

PZ is battling with the depreciation of the naira and a decrease in volumes of approximately six per cent overall resulted in an operating loss of N73.8bn for the first six months of the 2023/2024 financial year.

The currency woes led to a foreign exchange loss of N87bn on PZ’s foreign currency-denominated trade obligations, negatively impacting its operating result.

The company’s operating loss is the key driver of the N23.2bn negative equity that was recorded as of 30 November 2023.

The company’s books reveal that the Group’s financial liabilities, most of which are denominated in foreign currencies, were at N178bn, while the total assets were at N154.8bn.

“Following the further devaluation of the Naira post 30 November 2023, it is expected 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,” the company admitted.

Last year, the board recommended the offer from the company’s core shareholder, PZ Cussons (Holdings) Limited, to buy out minority shareholders and de-list the company.

PZ said the core shareholders have increased the previous offer from N21 per share to N23 per share as announced on 9 November 2023.

PZ said it will convene an extraordinary meeting of PZ in March to consider the options available to it for dealing with the company’s ongoing negative net asset position.

PZ said, “If the Company is not able to obtain the requisite regulatory and shareholder approvals to proceed with the proposed scheme, the Company 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.”