Cazoo, the used car dealer, has announced that it is engaged in discussions with the majority of its Convertible Note holders regarding a potential debt restructuring. The company issued these bonds last year and pays a two percent annual interest rate on them. The funding for the bonds was led by Viking Global Investors. Cazoo expressed concern in its annual accounts about its obligation to repurchase the $630 million notes if its shares stop trading on the New York Stock Exchange (NYSE).

Cazoo's share price has experienced a significant decline, falling 12 percent in the past five days alone to $1.20. This decrease is dangerously close to the $1 threshold set by the exchange for companies to maintain their listed status. To avoid violating this rule, Cazoo previously merged its share capital through a 1-20 share swap in February. However, the share price has continued to decline, resulting in a current market capitalization of just £37 million.

Despite the ongoing discussions regarding debt restructuring, Cazoo emphasizes that the talks are still in the early stages, and there are no guarantees of progress or reaching an agreement. The company is actively exploring strategic transactions to drive scale and accelerate its path to profitability, but no specific details have been provided regarding these plans.

Cazoo has undergone significant changes this year as part of its business plan for 2023. It has cut hundreds of jobs, closed customer centers, reduced the number of preparation sites, and divested its operations in Italy, Spain, and Germany. Additionally, it shut down its car subscription business in the UK and sold its data business, Cazana.

Cazoo's annual accounts for 2022 acknowledged the potential need for additional capital to pursue its business objectives and respond to unforeseen circumstances. The company's latest update indicates that its cost reduction measures and efforts to improve unit economics are progressing positively. However, there are concerns that the cash position, which currently stands at £215 million as of April, may continue to decrease throughout the year due to ongoing losses.

Cazoo highlights the completion of its exit from the EU, enabling a dedicated focus on the UK market. The company reaffirms its guidance for 2023 and emphasizes its commitment to improving unit economics, optimizing fixed costs, and maximizing its cash runway.

Paul Whitehead, CEO of Cazoo, expressed satisfaction with the second-quarter performance, citing the highest-ever level of retail gross profit per unit (GPU) achieved in April. The company expects the retail GPU to exceed £1,200 in Q2 2023, a substantial increase compared to previous periods.

Meanwhile, the Sunday Times Rich List reported that Alex Chesterman, the founder of Cazoo, did not meet the wealth threshold to be included in the list this year, attributing the decline to Cazoo's plummeting share price since its US stock market debut in August 2021.

Keywords: car dealer news, motor trade news, Cazoo, debt restructuring, Convertible Notes, bond holders, New York Stock Exchange, share price, market cap, strategic transactions, financial challenges, cost reduction, unit economics, cash position, Paul Whitehead, Alex Chesterman, Sunday Times Rich List.

You car read the original article at cardealer.co.uk