Online used car retailer Cazoo launches exchange offer over ‘loan’ notes as it seeks to cut debt

  • Cazoo wants to change convertible notes for secured ones plus shares
  • It’s part of a financial restructuring agreement
  • Move is a debt-for-equity swap deal for the online used car dealer

Time 10:53 am, November 6, 2023

Cazoo has put into motion the wheels of a financial move aimed at reducing its debt.

Following the news in September that it had confirmed a ‘restructuring’ agreement, the online used car retailer has now made an exchange offer over its convertible notes.

A convertible note is a loan that is like an IOU and is used to finance debt in the short term. However, rather than getting money back plus interest, investors can be repaid with equity.

Cazoo has said holders of its existing convertible notes can exchange them for new secured notes and Class A ordinary shares in the company.

It added that holders of 85% of its notes that are due in 2027 – valued at $630m (circa £507.3m) in total – had already committed to take part.

The new notes will be issued by Cazoo Group Ltd and guaranteed by all its existing subsidiaries

Interest on the new notes will accrue at a rate of 6.00% per annum from their date of issue, with a minimum of 4.00% payable in cash and, at the option of the company, up to 2.00% payable in kind.

The decision to restructure Cazoo’s debt came after it received a written notice from the New York Stock Exchange (NYSE) for failing to meet its rules.

According to the regulations, firms listed on the NYSE mustn’t have an average market cap below $50m (£40.3m) for 30 consecutive days of trading.

By falling below that level, Cazoo feared it may end up being liable to buy back the $630m notes should its shares cease to trade on the NYSE.

The exchange offer expires at 11.59pm New York City time on December 4, 2023 (4.59am on December 5 in the UK).

John Bowman's avatar

John has been with Car Dealer since 2013 after spending 25 years in the newspaper industry as a reporter then a sub-editor/assistant chief sub-editor on regional and national titles. John is chief sub-editor in the editorial department, working on Car Dealer, as well as handling social media.

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