Cazoo(US:CZOO)2023-11-05 16:00Capital Restructuring - The company plans to exchange $200 million of Convertible Notes for senior secured notes and Class A ordinary shares, resulting in the new shares representing 92% of the outstanding Class A ordinary shares post-exchange[2]. - The company plans to exchange $200 million of its 2.00% convertible senior notes due 2027 for new senior secured notes and Class A ordinary shares, resulting in the holders of the convertible notes owning 92% of the outstanding Class A ordinary shares post-transaction[14]. - The company aims to improve its capital structure, reduce indebtedness, and enhance its ability to raise capital through the proposed transactions[56]. - Cazoo is seeking shareholder approval for several proposals to improve its capital structure and enable profitable growth[44]. - The company aims to improve its capital structure and reduce debt through the proposed Transactions[106]. Shareholder Approval and Meetings - The Extraordinary General Meeting is scheduled for November 21, 2023, to approve the proposed transactions and amendments[13]. - The company requires shareholder approval for the proposed transactions, including the reverse stock split and share increase, to proceed[15]. - The extraordinary general meeting is scheduled for November 21, 2023, to vote on these proposals[28]. - The affirmative vote of at least 66 2/3% of Class A ordinary shares is required to approve the Transactions Proposal and Articles Amendment Proposal[83]. - The Reverse Stock Split Proposal requires an affirmative vote from more than 50% of Class A ordinary shares present at the meeting[84]. New Board of Directors - The company will replace its board of directors with a new seven-member board, with six members chosen by Convertible Noteholders and one by the existing board[5]. - The company aims to replace the current board with a new seven-member board, with six members chosen by Convertible Noteholders and one by the existing board[44]. - The new board will consist of seven directors, with six chosen by holders of Convertible Notes, potentially impacting future business strategies[139]. Reverse Stock Split - A reverse stock split will consolidate every 100 Class A ordinary shares into one new share, adjusting the authorized share capital to $435,500 divided into 1,650,000 Class A ordinary shares[3]. - A reverse stock split will be proposed, consolidating every 100 Class A ordinary shares into one new Class A ordinary share, increasing the par value from $0.002 to $0.20[15]. - The Reverse Stock Split will consolidate every 100 shares into one share, subject to shareholder approval[44]. - The Reverse Stock Split Proposal aims to consolidate every 100 shares into one share, increasing the per share trading value to attract institutional investors[47]. New Warrants - The company will issue three tranches of New Warrants to existing shareholders, with the first tranche exercisable if the company's equity value reaches $525 million, allowing for 422,098 shares at an exercise price of $99.50[5]. - The second tranche of New Warrants will be exercisable if the equity value reaches $1.025 billion, allowing for 462,298 shares at an exercise price of $177.37[5]. - The third tranche of New Warrants will be exercisable if the equity value reaches $1.5 billion, allowing for 510,961 shares at an exercise price of $234.85[5]. - New Tranche 1 Warrants allow existing shareholders to acquire 422,098 Class A ordinary shares at an exercise price of $99.50 if the company's equity value reaches $525 million[141]. - New Tranche 2 Warrants permit acquisition of 462,298 Class A ordinary shares at an exercise price of $177.37 if the company's equity value reaches $1.025 billion[142]. - New Tranche 3 Warrants enable acquisition of 510,961 Class A ordinary shares at an exercise price of $234.85 if the company's equity value reaches $1.5 billion[143]. Financial Performance and Risks - The company has a history of losses and may not achieve profitability in the future, raising concerns about its ability to continue as a going concern[151]. - The company has an accumulated loss of approximately £1,427 million as of June 30, 2023, with cash and cash equivalents of £194.6 million and unused capacity under stocking loans of £97.6 million[168]. - The company expects to breach the liquidity covenant of £50 million during the second half of 2024 without raising additional capital[167]. - The company may continue to incur losses in the future due to various factors, including competition and economic conditions[179]. - The company has faced substantial doubt about its ability to continue as a going concern due to uncertainties in forecasting operating performance[185]. Market Conditions and Economic Factors - The automotive business is facing risks from the larger ecosystem, including consumer demand shifts towards electric vehicles and global supply chain challenges[199]. - Economic conditions, including rising interest rates and vehicle prices, may negatively impact vehicle purchase demand[200]. - Negative trends in the UK economy and other factors, such as stock market volatility and increased unemployment, may further reduce vehicle demand[200]. - Increases in gasoline prices may adversely affect consumer demand for vehicles, impacting sales and valuations[199]. - The lingering impacts of COVID-19 continue to constrain the supply of new cars, which may lead to a decline in the supply of used cars over time[199].