10:25 am, December 19, 2023
Online used car retailer Cazoo is facing the very real possibility of ceasing business, it has revealed.
The company, which is listed on the New York Stock Exchange, said yesterday that its liquidity – the ability to turn assets into cash – was limited and it must ‘substantially alter, or possibly even discontinue, operations’ if it didn’t get enough money, according to a Reuters report.
In a regulatory filing, it told of the need to raise extra money before the start of the second half of next year if it was to realise its business objectives.
The warning was issued less than two weeks after Cazoo founder Alex Chesterman finally stood down following confirmation of a restructuring deal that saw its $630m (circa £496m) debt converted to $200m (£157m).
As of June 30, the troubled used car dealer was reported to have cash and cash equivalents of £194.6m ($246.11m). It is set to end this year with cash of between £100m and £115m.
It is planning to cut back cash use to between £25m and £35m per quarter from the beginning of next year – down from the £30m to £40m it currently does.
Before the debt restructuring, Cazoo also initiated a reverse stock split, in which it merged all its share capital, to help raise funds.
As recently as August, Cazoo had raised major doubts about being able to carry on as a going concern, as it battled with ongoing inventory problems against a harsh economic backdrop in its markets.
In a statement yesterday, it said: ‘We expect to continue to be impacted by the challenging UK and global macroeconomic environment, which could adversely impact our ability to sustain revenue growth consistent with the past, or at all, over the next twelve months.’
