The Security and Exchange Commission (SEC) Nigeria has rejected the buy-out of minority shareholders of PZ Cussons Nigeria Plc PZCN (NGX: PZ).
In a regulatory filing on Wednesday, PZCN notified the Nigerian Exchange Limited and the investing public that the Securities and Exchange Commission declined the Company’s request for its No Objection to PZ Cussons (Holdings) Limited’s intention to acquire the shares held by all the other shareholders of PZCN at an offer price of ₦23 per share.
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Investogist reported in September of PZ Cussons (Holdings) Limited’s intention to buy-out minority shareholders of PZCN at ₦21.00 per share.
Subsequently, the offer was increased from ₦21.00 per share to ₦23.00 per shares on November 9, 2023.
The Board of Directors of PZ Cussons Nig. Plc will communicate further developments to shareholders in due course.
PZCN’s Q2 2023/2024 unaudited interim financial statements of PZCN reflected a negative net asset position. The company informed its shareholders of this position in an explanatory note published in February 2024.
A negative net asset position is a financial situation where a company’s liabilities exceed its assets.
PZCN’s revenue grew by 19% to ₦68.08 billion at the end of November 2023. On the other hand, its profit slumped by 1,067% to a loss of ₦74.14 billion.
The company attributed the loses to the ongoing depreciation of the Naira. The company had a foreign exchange loss of ₦87.0 billion on foreign currency-denominated trade obligations, negatively impacting its operating result.
Devaluation of the Naira has continued post November 2023, therefore the company expects further material foreign exchange losses.
The buy out of minority shareholders and subsequent delisting of the company would give the core shareholder ability to deal with the company’s challenges. First, it will significantly simplify and strengthen the Company’s operations to allow it to return to longer-term growth.
There are indications that the company will pursue other measures to address its negative net asset position. These measures will also enable it repay or settle outstanding amounts owed to its creditors.
Such measures could include equity issuance, debt for equity conversion, rights issues, assets sales or similar.
Nnamdi Maduakor is a Writer, Investor and Entrepreneur
