Cazoo’s founder saw his 24,3% stake in the car retailer nearly wiped out following a debt-for equity swap of $630 million. Viking Global Investors will be the largest shareholder, which is a US-based fund.
Sky News reported the first time that the company had negotiated the swap with bondholders, after the share price fell below the $1 threshold needed to keep its position on the New York Stock Exchange.
Since Cazoo was listed at $7 billion in August of 2021, the share price has fallen. Alex Chesterman, who founded Cazoo and is still its chairman in 2018, and was the founder of Zoopla and Lovefilm, sold shares valued at £100 million prior to the debut on the stock market.
Cazoo increased its sales last year from 49,461 up to 85,035 after buying and inspecting used cars and vans before delivering them directly to the homes of customers. It was under pressure to make a profit by the markets after it made losses before taxes of £531.5 in 2021 and £525.5 last year.
In an effort to reduce losses, the company cut hundreds of employees and left Germany, Spain France and Italy. The company has set the goal of being profitable by the year’s end by focusing its efforts on the UK. Last week, its shares were priced at just 99 cents and the company faced delisting from the NYSE if it traded below $1 for a 30-day period.
In order to help the company turn around, the restructuring agreement has provided new borrowing facilities of $200 million. Cazoo’s current equity holders control 8 percent of the company after the deal. They will also receive warrants that will unlock new shares once the market value reaches $525 millions.
Chesterman stated: “Today’s agreement represents an excellent opportunity to deleverage Cazoo’s capital structure, and increase the financial flexibility that it needs to achieve profitable growth.”