Alex Chesterman – the outspoken founder of online used car dealership Cazoo – has finally stepped down.
Following confirmation the troubled used car dealer had restructured its debt in a deal that saw its $630m debt converted to $200m yesterday, Chesterman bowed out.
The former CEO was said to be ‘retiring’ along with four other directors who stepped down at the same time.
Cazoo will now be chaired by Tim Isaacs, an accountant with a background in fund management. Joining him yesterday were Alan J Carr, Andrew Herd and Nicholas Pike. Mary Reilly is the only board member who remains with the firm.
Chesterman wound up car dealers when he burst onto the motor trade scene labelling them ‘sharp elbowed salesmen’ claiming that the traditional method of selling cars was ‘flawed on every level’.
The Zoopla and Love Film founder later lambasted dealers for only offering ‘7 minute test drives’ and claimed buying a car from a dealership was ‘inconvenient’.
His comments enraged the dealers who took great pleasure in watching the business’ value collapse from a near $7bn valuation at its launch on the New York Stock Exchange in 2021 to an $11.6m valuation today.
That’s a decline of 99.9% in less than 2.5 year.
Paul Whitehead, Cazoo’s current CEO, said: ‘On behalf of the company, I’d like to thank Alex Chesterman and the other retiring board members for their service and guidance since our foundation.’
The online used car dealer launched with a fanfare of promises to revolutionise car buying by selling vehicles purely online.
It grew rapidly by snapping up businesses including Imperial Car Supermarkets, vehicle prep sites and car subscription companies. It also expanded into Europe. The full story of its ill-fated growth can be seen in our video above.
Bosses, led by Chesterman, blew hundreds of millions of pounds on marketing and sponsorship but the firm has still never made a profit.
Cazoo has since made hundreds of staff redundant, backed out of Europe and shut down many of the businesses it bought in the UK, selling off many for less than it paid for them.
Just months before Cazoo listed on the stock market, Chesterman cashed in a reported £100m of shares. At the time, sources said he was making way for new ‘later stage investors’.
The complicated debt restructuring eases a heavy burden on the shoulders of the business, which believes it has now turned a corner.
Cazoo launched the $630m (circa £501m) exchange offer over its convertible notes with shareholders last month.
A convertible note is a loan similar to an IOU and finances debt in the short term. However, rather than getting money back plus interest, investors can be repaid with equity.
The move has reduced Cazoo’s ratio of its debt capital to equity capital ‘significantly’, said the online used car retailer.
Boss Whitehead added: ‘Completion of these transactions represents a significant inflection point for Cazoo.
‘With an improved capital structure and encouraging operational momentum, as demonstrated by our successive record retail GPU figures and much-improved unit economics, we can look to 2024 with confidence.
‘I and the management team welcome the opportunity to work with the new board to deliver continued progress against our strategic goals of achieving profitable growth, while capturing a higher share of the UK used car market and exploring various strategic initiatives to complement our business model and brand.’
The new plan comes at a time of significant turbulence for the used car market. Values have been plummeting in recent months and many businesses have been forced to dramatically write down used car values. It is unlikely that Cazoo has been sheltered from this storm.