Cazoo Announces Restructuring Agreement with Noteholders to Materially Reduce its Debt and Improve its Capital Structure
- Debt reduction provides enhanced financial flexibility for future growth
- $630 million of Convertible Notes to be cancelled in exchange for $200 million of new senior secured debt and new equity
- Deleveraging expected to improve financial flexibility and ability to meet NYSE listing standards
- New warrants to be issued to existing shareholders
- Transactions will dilute existing shareholders
- Company received a notice of non-compliance with NYSE listing standards
Noteholders signal continued support for Cazoo
Debt reduction provides enhanced financial flexibility to support future growth
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of Convertible Notes to be cancelled in exchange for$630 million of new senior secured debt and new equity$200 million - Debt maturity profile remains unchanged, but level of debt is significantly reduced
- New warrants to be issued to existing shareholders, subject to future performance
Rationale for the Transactions
It is the view of the board of directors of Cazoo (the “Board”) that the material debt reduction offered by the Transactions is beneficial to the Company’s future. Cazoo’s current capital structure weighs on the Company’s equity notwithstanding its strong cash balance and recent progress towards its goal of profitable growth. Deleveraging will reduce the Company’s current debt overhang, is expected to improve the Company’s financial flexibility to support its return to growth, should improve the Company’s ability to meet the NYSE continued listing standards and should facilitate progress on various strategic options. While the Transactions will dilute existing Cazoo shareholders, the Transactions provide for potential future upside through the equity retained by existing shareholders and the issuance of new warrants to existing shareholders.
Alex Chesterman, Founder and Executive Chairman of Cazoo, commented, “Today’s agreement represents an opportunity to significantly deleverage Cazoo’s capital structure and enhance the financial flexibility Cazoo needs in order to achieve profitable growth.
“As our results for the first half of this year show, we are making good progress on improving our unit economics and reducing our fixed costs, bringing us closer to our objective of achieving profitable growth and capturing a higher share of the significant
Notes Exchange and New Shares
At the closing of the Transactions, the Company will cancel all
New Warrants
At the closing of the Transactions, the then-existing shareholders of the Company’s Class A Shares (after giving effect to the Reverse Stock Split (as defined below)) will retain pro rata
Reverse Stock Split and Increase in Share Capital
Prior to completion of the Transactions and after receiving approval from its shareholders, the Company plans to effect a reverse stock split (the “Reverse Stock Split”) of the Company’s issued and unissued share capital, par value
New Board
In connection with the Transactions, the Board will be reduced from eight members to seven members, with six members chosen by the owners of the Company’s Convertible Notes and one chosen by Cazoo’s current board of directors.
Closing Conditions
The closing of the Transactions is subject to shareholder approval, participation by
Cazoo recently released Q2 and H1 2023 financial results that can be found on the Company's Investor Relations website. Cazoo had cash and cash equivalents of
Goldman Sachs International is serving as exclusive financial advisor and Freshfields Bruckhaus Deringer US LLP and Maples and Calder are serving as legal advisor to the Company. PJT Partners LP is serving as exclusive financial advisor and Weil, Gotshal & Manges LLP and Campbells LLP are serving as legal advisor to the Noteholders.
Receipt of Continued Listing Standards Notice from NYSE
On September 19, 2023, the Company received a written notice (the “Notice”) from the NYSE that it is not in compliance with the continued listing standards set forth in Rule 802.01B of the NYSE Listed Company Manual because its average global market capitalization over a consecutive 30 trading-day period was less than
The Notice has no immediate impact on the listing of the Company’s Class A ordinary shares, subject to the Company’s compliance with the NYSE’s other continued listing requirements.
About Cazoo - www.cazoo.co.uk
Our mission is to transform the car buying and selling experience across the
Important Additional Information
This communication is not an offer to purchase nor a solicitation of an offer to sell any securities. The Company’s contemplated debt exchange offer has not yet commenced. In connection with the commencement of the exchange offer, the Company will file with the SEC a tender offer statement on Schedule TO. The exchange offer will be made only pursuant to the offer to purchase and related tender offer documents filed as part of the Schedule TO with the SEC upon commencement of the exchange offer. You are strongly advised to read the tender offer statement (including an offer to purchase and related tender offer documents) that will be filed by the Company with the SEC in its entirety when it becomes available, because it will contain important information, including the terms and conditions of the exchange offer. These documents will be made available at no charge on the SEC’s website at www.sec.gov. These documents may also be obtained free of charge from Cazoo by requesting them by mail at 41 Chalton Street,
No Offer
This communication does not constitute an offer to sell or exchange, or the solicitation of an offer to buy or exchange any securities, or a solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation, sale or exchange would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of section 10 of the Securities Act of 1933, as amended, or an exemption therefrom.
Forward-Looking Statements
This communication contains “forward-looking statements” within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. The expectations, estimates, and projections of the business of Cazoo may differ from its actual results and, consequently, you should not rely on forward-looking statements as predictions of future events. These forward-looking statements generally are identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,” “strategy,” “future,” “opportunity,” “plan,” “may,” “should,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. Forward-looking statements are predictions, projections and other statements about future events that are based on current expectations and assumptions and, as a result, are subject to risks and uncertainties. Many factors could cause actual future events to differ materially from the forward-looking statements in this press release, including but not limited to: (1) the implementation of and expected benefits from our business realignment plan, the wind-down of operations in mainland
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Investor Relations:
Cazoo: Anna Gavrilova, Head of Investor Relations, investors@cazoo.co.uk
ICR: cazoo@icrinc.com
Media:
Cazoo: Peter Bancroft, Interim Communications Director, press@cazoo.co.uk
Source: Cazoo