SHAREHOLDER of PZ Cussons Nigeria Plc have voted against the company’s proposal to convert $34.26 million of its debt into equity.

The decision was made during the company’s Extraordinary General Meeting (EGM) held on Thursday, March 13, in Abuja.

A debt-to-equity swap allows a company to reduce its debt burden by converting outstanding loans into shares. In a statement issued on February 16, PZ Cussons Nigeria announced plans to convert a portion ($34.26 million) of its $40.26 million loan into equity, pending regulatory approval.

The proposal involved converting $34.26 million of the debt at a rate of N23.60 per share, creating 2,194,716,637 new ordinary shares valued at 50 kobo each for its parent company, PZ Cussons Holdings, UK. This would have increased the parent company’s shareholding from 73.27 per cent to 82.79 per cent and raised its share capital by N1,097,358,318.50.

However, minority shareholders opposed the plan, arguing it was not in their best interest. Exercising their rights at the EGM, those with the highest stake voted against the debt-to-equity conversion, blocking the company’s restructuring efforts.

“The rule doesn’t allow the major investors to vote. Hence minority shareholders voted against it with their proxies led by CardinalStone, AMCON (Asset Management Corporation of Nigeria), and others,” a shareholder who pleaded anonymity told The ICIR.

In the result sheet signed by PZ Cusson’s registrar, First Registrars and Investor Services Limited, seen by the reporter, 12 minority shareholders with 76.8 per cent holdings outrightly voted against the PZ Cusson debt-to-equity swap.

The 12 shareholders hold 258,066,509 units of the company’s total shares.

Their vote was against 663 shareholders with 77,952,420 units of shares, representing 23.2 per cent holdings that voted for PZ Cussons to convert the $34.26 million debt to equity.

The shareholder that spoke with The ICIR explained that the 12 minority shareholders were able to knock out the proposed plan because of the percentage of their holdings as against the holdings of the 663 minority shareholders that supported the plan.

The voting was the case of “the principle of minority has a say; the majority have the way.

“It is an outright rejection of debt-to-equity conversion by PZ Cussons. The minority shareholders have spoken,” the shareholder said.

According to the source, shareholders’ comments and position before the resolution were an outright rejection of the offer of N23.60 for debt-to-equity conversion by PZ Cussons UK, the major shareholder.

The minority shareholders proposed that the value be reviewed upward to N37.10k, being the highest price traded on PZ Cusson’s stock as of Wednesday, March 12.

They also noted the implication of the majority shareholder offer of N23.60 would see the latter raise its holdings to 82.79 per cent from 73.27 per cent.

“This will see PZ Cussons contravene the floating rule of the exchange, which allows for a free float of 20 per cent for listed firms on the Nigerian stock market.

“Hence at 82.79 per cent, it will likely be in breach of the free float rule, hence the need to review downward,” the shareholder said.

Although the board of PZ Cussons after consideration of the minority shareholders’ proposal, decided to offer N37.10k, reduce the debt to equity conversion from $34.6 million to $31.6 million, leaving a balance of $9 million rather than the initial $6 million, however, the results of the voting technically knocked out the debt-equity conversion plan, the shareholder said.

The source believes that the vote went against PZ Cusson’s plans because there was no proper engagement with the minority shareholders by the company before the EGM.

“You even saw a court injunction by aggressive shareholders stopping the EGM,” the source added.

The ICIR reported earlier that leaders of some shareholder’s associations had kicked against the PZ Cussons’ plan to convert $34.26m debt to equity.

At its Facts Behind the Figures Presentation on Wednesday, February 12 at the Nigerian Exchange Limited (NGX) house in Lagos, the organisation reported exclusively that the minority shareholders have called on the company’s management to be more accountable and return to profitability as it considers plans to remain listed on the Nigerian stock exchange.

The ICIR had also reported that the company walked into debt when in June 2022, PZ Cussons Holdings Limited (PZCH) loaned $40.26 million to PZ Cussons Nigeria Plc (PZCN) to help cover raw material and operational costs, which were difficult to manage due to currency shortages.

The devaluation of the naira experienced between 2023 and 2024 negatively impacted PZCN’s financial results and led to a rise in its foreign currency-denominated loans.

After its decision, the board agreed to convert a portion of the $34.26 million outstanding loan into equity as the most effective strategy to reduce the company’s debt and strengthen its balance sheet.

Had the conversion been successful, a remaining shareholders loan balance of $6 million would still have been payable to the parent company.