PZ Cussons Nigeria Plc has called an extra-ordinary general meeting of its shareholders after it suffered a N73.8bn loss, which brought the value of its net assets into the red zone.
In a notice of the EGM filed with the Nigerian Exchange Limited on Tuesday, the meeting will consider both the unaudited financial statement for the period ending November 30, 2023, and measures to address the negative net assets value of the company.
PZ Cussons had in September announced a plan to buyout the 26.73 per cent of shares held by minority investors at the rate of N21 per unit and delist from the Nigerian exchange.
The buyout price had since been increased to N23 per share.
The explanatory note accompanying the notice of the EGM said that Q2 2023/2024 unaudited interim financial statements of the company showed that its had fallen into a negative net asset position.
For the half-year period ended November 30, 2023, the firm reported a 19 per cent hike in its revenue to N68.09bn.
However, it returned a pre-tax loss of N73.79bn and a post-tax loss of N74.14bn, which was a 1,067 per cent plunge from a profit of N7.67bn in the previous period.
The explanatory note signed by its Company Secretary, Olubukola Olonade-Agaga, said the ongoing depreciation of the naira and “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”.
“In addition, the company had a foreign exchange loss of N87bn on our foreign currency-denominated trade obligations, negatively impacting our operating result.
“The above operating loss is the key driver of the company having a negative total equity position of N23.2bn as of November 30, 2023. As of that day, the group’s financial liabilities, most of which are denominated in foreign currencies, were at N178bn, while the Total Assets were at N154.8bn.”
Projecting more losses, the company said that the further devaluation of the naira post-November 2023 would lead to material foreign exchange losses concerning 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,” the firm noted.
Speaking on its options, the board of directors of the company said, “The board continues to recommend the offer from the company’s core shareholder, PZ Cussons (Holdings) Limited, to buy out minority shareholders and de-list the company. The offer was increased from N21 per share to N23 per share as announced on November 9, 2023.
“The proposed scheme is intended to enable the core shareholder to significantly simplify and strengthen the Company’s operations to allow it to return to longer-term growth,” it added.
Revealing that it had yet to get regulatory approval from the Securities and Exchange Commission for the proposed share buyback scheme, it stated some options it would consider to weather the storm.
“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,” the firm said.
