Cazoo Group Ltd (NYSE: CZOO) (“Cazoo” or “the Company”), the
UK’s leading independent online car retailer, which makes buying
and selling a car as simple as ordering any other product online,
announced today that it is offering holders of its existing
convertible notes the opportunity to exchange their convertible
notes and receive new secured notes and Class A ordinary shares of
the Company. Holders of 85% of the Company’s convertible notes have
already committed to participate in this transaction.
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The Company is making an offer to the holders of all $630
million aggregate principal amount of the Company’s 2% Convertible
Senior Notes due 2027 (the “Convertible Notes”) issued pursuant to
the indenture (the “2022 Indenture”) dated as of February 16, 2022,
between the Company, as issuer, and U.S. Bank Trust Company,
National Association, as trustee (the “Convertible Notes Trustee”).
The Company is offering to exchange, upon the terms and subject to
the conditions set forth in the exchange offer memorandum dated
November 3, 2023 (the “Offering Memorandum”), any and all
Convertible Notes (including any accrued and unpaid interest up to
but not including the Closing Date (as defined herein)) for (i) a
pro rata portion of US$200 million aggregate principal amount of
4.00%/2.00% Cash/Payment-in-Kind Toggle Senior Secured Notes due
2027 (the “New Notes”) and (ii) a pro rata portion of Cazoo’s Class
A ordinary shares (the “New Shares” and, together with the New
Notes, the “Offered Securities”) which will represent 92% of the
total Class A ordinary shares outstanding immediately after giving
effect to the exchange offer (the “Exchange Offer”).
The New Notes will be issued by Cazoo Group Ltd and will be
guaranteed by all of the Company’s existing subsidiaries organized
in the United Kingdom (the “New Notes Guarantors”). The New Notes
will be secured, subject to certain agreed security principles and
customary limitations and exceptions, by (a) a first priority fixed
charge over the Company’s bank accounts; (b) a first priority
assignment of all intragroup receivables owed to the Company; (c) a
first priority fixed charge over all of the shares in Cazoo
Holdings Limited granted by the Company; (d) a first priority fixed
charge over each New Notes Guarantors’ bank accounts kept in
England and Ireland, including at least one bank account of Cazoo
Holdings Limited that shall hold a minimum balance of £50,000,000
at all times; (e) a first priority fixed charge over the shares in
each New Notes Guarantor; (f) a first priority assignment of all
intragroup receivables owed to each New Notes Guarantor; and (g) a
first priority floating charge over the assets of each New Notes
Guarantor, including intellectual property but excluding (among
others) vehicles which secure or are subject to a negative pledge
under floor plan facilities and transporter vehicles that secure or
are subject to a negative pledge under arrangements used to finance
such transporter vehicles (the “New Notes Collateral”). The New
Notes will be issued pursuant to an indenture expected to be
entered into with U.S. Bank Trust Company, National Association, as
trustee, and GLAS Trust Corporation Limited, as security agent.
The New Notes will be the Company’s general senior obligations
and (1) will rank equally in right of payment with any existing and
future indebtedness of the Company that is not subordinated in
right of payment to the New Notes; (2) will rank senior in right of
payment to any existing and future indebtedness of the Company that
is expressly subordinated in right of payment to the New Notes; (3)
will rank senior to any existing and future unsecured indebtedness
of the Company to the extent of the value of the property and
assets which secure the New Notes; (4) will be effectively
subordinated to any existing and future secured indebtedness of the
Company and its subsidiaries that is secured by property or assets
that do not secure the New Notes, to the extent of the value of the
property and assets securing such indebtedness; and (5) will be
structurally subordinated to any existing and future indebtedness
of subsidiaries of the Company that do not guarantee the New
Notes.
Interest on the New Notes will accrue at a rate of 6.00% per
annum from the date of the issuance of the New Notes, with a
minimum of 4.00% payable in cash and, at the option of the Company,
up to 2.00% payable in kind.
The Company’s Class A ordinary shares are currently listed on
the New York Stock Exchange under the symbol “CZOO”. On November 2,
2023, the last reported sale price of the Company’s Class A
ordinary shares as reported on the New York Stock Exchange was
$0.41 per Class A ordinary share.
The following table describes certain terms of the Exchange
Offer:
Title of Existing Notes
CUSIP Number(1)
Principal Amount
Outstanding
Consideration per $1,000 of
Convertible Notes(2)
Total Consideration
2% Convertible Senior Notes due 2027
14986T AA3
$
630,000,000
(1) $317.46 4.00%/2.00%
Cash/Payment-in-Kind Toggle Senior Secured Notes due 2027 and (2)
7.08 Class A ordinary shares(3)
(1) $ 200,000,000 4.00%/2.00%
Cash/Payment-in-Kind Toggle Senior Secured Notes due 2027 and (2)
4,465,799 Class A ordinary shares(3)
____________________
(1)
No representation is made as to the
correctness or accuracy of the CUSIP numbers listed in this
communication or printed on the Convertible Notes. CUSIPs are
provided solely for convenience.
(2)
Consideration in the form of Offered
Securities per $1,000 principal amount of Convertible Notes that
are validly tendered and accepted for exchange (including any
accrued and unpaid interest up to but not including the Closing
Date (as defined herein) and Additional Amounts (as defined in the
2022 Indenture), subject to any rounding as described herein.
(3)
Illustrative calculation using the number
of Class A ordinary shares issued and outstanding as of September
22, 2023 of 38,833,034 Class A ordinary shares to represent the 8%
of the total Class A ordinary shares outstanding immediately after
giving effect to the Exchange Offer held by existing shareholders,
resulting in 446,579,891 Class A ordinary shares to be issued to
holders of the Convertible Notes as Offered Securities,
representing 92% of the total Class A ordinary shares outstanding
immediately after giving effect to the Exchange Offer. After
applying the 1-to-100 ratio to be used in the reverse stock split
that is a part of the Transactions (as defined below), the total
number of Class A ordinary shares to be issued to holders of the
Convertible Notes as Offered Securities amounts to 4,465,799 Class
A ordinary shares. The actual number of Class A ordinary shares to
be issued in connection with the Exchange Offer will depend on the
number of Class A ordinary shares issued and outstanding following
the Reverse Stock Split immediately prior to the Closing Date.
The Exchange Offer will expire at 11:59 p.m., New York City
time, on December 4, 2023, unless extended or earlier terminated by
the Company (such date and time, as they may be extended, the
“Expiration Deadline”). To be eligible to receive the Offered
Securities, holders of Convertible Notes must validly tender their
Convertible Notes at or prior to 11:59 p.m., New York City time, on
December 4, 2023, unless extended by the Company. Tenders of
Convertible Notes may be validly withdrawn at any time at or prior
to the Expiration Deadline, except as such Expiration Deadline may
be extended by the Company (such date and time, as they may be
extended, the “Withdrawal Deadline”).
The obligation of the Company to complete the Exchange Offer is
subject to certain conditions, including the receipt of Convertible
Notes validly tendered (and not validly withdrawn) prior to the
Expiration Deadline representing not less than 100% of the
aggregate principal amount of Convertible Notes outstanding (the
“Minimum Exchange Condition”). The Exchange Offer may be amended or
extended at any time prior to the Expiration Deadline and for any
reason, including if any of the conditions of the Exchange Offer
are not satisfied or waived by the Expiration Deadline, subject to
applicable law and the Transaction Support Agreement (as defined
below).
The Convertible Notes may be tendered and will be accepted for
payment only in principal amounts equal to the minimum denomination
of US$1,000 and integral multiples of US$1,000 in excess thereof.
No alternative, conditional or contingent tenders will be accepted.
The New Notes will be issued in a minimum denomination of US$1,000
and integral multiples of US$1 in excess thereof. In addition, no
fractional Class A ordinary shares will be issued in connection
with the Exchange Offer. If, under the terms of the Exchange Offer,
(1) any tendering holder of Convertible Notes is entitled to
receive New Notes in a principal amount that is not a permitted
denomination, the principal amount of the New Notes will be rounded
down to the nearest permitted denomination and no cash will be paid
for fractional New Notes not received as a result of such rounding
down and (2) any tendering holder of Convertible Notes is entitled
to receive fractional amounts of New Shares, the amount of the New
Shares will be rounded down to the nearest Class A ordinary share
and no cash will be paid for fractional New Shares not received as
a result of such rounding down.
The closing date for the Exchange Offer will occur promptly
after the Expiration Deadline (the “Closing Date”). The Convertible
Notes that are validly tendered (and not validly withdrawn) prior
to the Expiration Deadline in exchange for the Offered Securities,
will be retired and cancelled on or around the Closing Date and
cannot be reissued. Upon such retirement and cancellation, the 2022
Indenture will be discharged and any claims under the Convertible
Notes will be released in consideration for the Offered Securities.
On the Closing Date, the New Notes and New Shares will be issued by
the Company in exchange for the Convertible Notes which are
tendered for exchange and accepted by the Company on the Closing
Date in the amount and manner described in the Offering Memorandum.
On the Closing Date, (1) the New Notes due to such holders pursuant
to the terms hereof will be delivered to accounts specified by such
holders through DTC and (2) the New Shares due to such holder will
be delivered to accounts of such holders established by the
Company’s transfer agent, Equiniti Trust Company.
This Exchange Offer is being made in accordance with the terms
of a Transaction Support Agreement dated September 20, 2023, as
amended on November 3, 2023 (the “Transaction Support Agreement”)
among the Company, certain of its subsidiaries, certain holders of
Convertible Notes, who, together with the holders of Convertible
Notes who signed joinder agreements to the Transaction Support
Agreement as of the date of the Offering Memorandum, hold 85% of
the aggregate outstanding principal amount of the Convertible Notes
(the “Consenting Noteholders”) and certain holders of our Class A
ordinary shares (together with the shareholders who signed joinder
agreements to the Transaction Support Agreement as of the date of
the Offering Memorandum, the “Consenting Equityholders” and,
together with the Consenting Noteholders, the “Consenting
Stakeholders”). Subject to the terms and conditions set forth in
the Transaction Support Agreement, the Consenting Noteholders have
agreed to tender their Convertible Notes in the Exchange Offer
prior to the Expiration Deadline.
The Exchange Offer is one of a series of transactions being
implemented by the Company pursuant to the Transaction Support
Agreement, which include (i) the Exchange Offer, (ii) the issuance
of three tranches of new warrants to our existing shareholders,
(iii) the replacement of the existing board of directors with a new
seven-person board of directors on or after the closing date of the
Transactions (as defined below), with six members chosen by the
holders of our Convertible Notes, (iv) a reverse stock split, (v)
an increase in our authorized share capital, (vi) amendments to our
amended and restated articles of association and (vii) the
solicitation of shareholder approval of the Exchange Offer, the
issuance of the new warrants, the change in the board, the reverse
stock split, the increase in our authorized share capital,
amendments to our amended and restated articles of association and
the Transaction Support Agreement and the transactions contemplated
thereby (collectively, the ”Transactions”).
If the Exchange Offer is not completed due to failure to satisfy
the Minimum Exchange Condition, the Company will implement the
Exchange Offer through an English restructuring plan or scheme of
arrangement rather than through this Exchange Offer (a “Scheme
Transaction”). Pursuant to a Scheme Transaction, if approved by the
requisite majorities (which are more than 75% by value of the
Convertible Notes who vote in the case of a restructuring plan and
more than 75% by value of the Convertible Notes and more than 50%
by number of the holders of the Convertible Notes who vote in the
case of a scheme of arrangement) and then sanctioned by an English
court, the Company would be authorized by the court to exchange the
Convertible Notes for the New Notes and the New Shares. The
Consenting Noteholders own 85% of the aggregate principal amount of
the Convertible Notes outstanding as of the date of the Offering
Memorandum and have agreed to vote in favor of a Scheme
Transaction, subject to the terms of the Transaction Support
Agreement. Accordingly, the approval of the Consenting Noteholders
suffices to implement a Scheme Transaction. As a result, if holders
of the Convertible Notes do not tender their Convertible Notes in
the Exchange Offer or if the Exchange Offer is not completed due to
the failure to satisfy the Minimum Exchange Condition, holders of
Convertible Notes, subject to the sanction of the English court,
will likely still be exchanged into the Offered Securities pursuant
to a Scheme Transaction.
In connection with any Scheme Transaction, holders of the
Convertible Notes will receive their pro rata portion of up to $180
million of the New Notes. In addition, in connection with any
Scheme Transaction, only holders of the Convertible Notes who are a
party to the Transaction Support Agreement, who execute a joinder
and become a party to the Transaction Support Agreement or who
become a party to an alternative agreement (an “Alternative Tender
Agreement”) with the Company to tender (or cause to be tendered)
and not withdraw such holder’s Convertible Notes in the Exchange
Offer in accordance with the Offering Memorandum on or prior to
November 17, 2023 (the “Scheme Incentive Deadline”) (together, the
“Scheme Incentive Noteholders”) will receive a pro rata portion of
the remaining $20 million of the New Notes (the “Scheme Transaction
Incentive”) while holders of the Convertible Notes who are not
Scheme Incentive Noteholders will not receive any portion of the
remaining $20 million of the New Notes.
As a result, in connection with any Scheme Transaction, if the
Scheme Incentive Noteholders comprise less than all of the holders
of the Convertible Notes, the aggregate principal amount of the New
Notes would be less than $200 million. For the avoidance of doubt,
the Scheme Transaction Incentive will not apply if the Exchange
Offer is completed in accordance with its terms, including if 100%
of the holders of the Convertible Notes become a party to the
Transaction Support Agreement or an Alternative Tender Agreement
prior to the Scheme Incentive Deadline.
To become a party to the Transaction Support Agreement, holders
of the Convertible Notes are requested to submit a validly
completed executed joinder to the Transaction Support Agreement in
the form attached as Appendix V to the Offering Memorandum to the
Company at legal@cazoo.co.uk.
The Company has not registered the Offered Securities under the
United States Securities Act of 1933, as amended (the “Securities
Act”), or under the securities laws of any state of the United
States. The Offered Securities may not be offered or sold absent
registration except pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the
Securities Act. The Offered Securities are being offered only (1)
inside the United States in accordance with Section 4(a)(2) of the
Securities Act to (i) “qualified institutional buyers” as defined
in Rule 144A under the Securities Act (“QIBs”) and (ii)
institutional “accredited investors” (within the meaning of Rule
501(a)(1), (2), (3), (7), (8), (9), (12) or (13) under the
Securities Act) (“IAIs”), and (2) outside the United States, to
persons other than “U.S. persons” as defined in Rule 902 under the
Securities Act in compliance with Regulation S under the Securities
Act (collectively, “Regulation S Holders”).
Requests for the Offering Memorandum and other documents
relating to the Exchange Offer may be directed to U.S. Bank Trust
Company, National Association, the exchange agent and information
agent for the Exchange Offer, toll free at (800) 934-6802.
None of the Company, any of its subsidiaries or affiliates, or
any of their respective officers, boards of directors, members or
managers, the exchange agent, the information agent, Convertible
Notes Trustee or the trustee of the New Notes is making any
recommendation as to whether holders of Convertible Notes should
tender any Convertible Notes in response to the Exchange Offer, and
no one has been authorized by any of them to make such a
recommendation.
About Cazoo — www.cazoo.co.uk
Our mission is to transform the car buying and selling
experience across the UK by providing better selection, value,
transparency, convenience and peace of mind. Our aim is to make
buying or selling a car no different to ordering any other product
online, where consumers can simply and seamlessly buy, sell or
finance a car entirely online for delivery or collection in as
little as 72 hours.
Important Additional Information
This communication is not an offer to purchase nor a
solicitation of an offer to sell any securities. In connection with
the commencement of the Exchange Offer, the Company will file with
the SEC a tender offer statement on Schedule TO. The Exchange Offer
will be made only pursuant to the Offering Memorandum and related
tender offer documents filed as part of the Schedule TO with the
SEC upon commencement of the Exchange Offer. You are strongly
advised to read the tender offer statement (including the Offering
Memorandum and related tender offer documents) that will be filed
by the Company with the SEC in its entirety when it becomes
available, because it will contain important information, including
the terms and conditions of the Exchange Offer. These documents
will be made available at no charge on the SEC’s website at
www.sec.gov. These documents may also be obtained free of charge
from Cazoo by requesting them by mail at 41 Chalton Street, London
NW1 1JD, United Kingdom.
No Offer
This communication does not constitute an offer to sell or
exchange, or the solicitation of an offer to buy or exchange any
securities, or a solicitation of any vote or approval, nor shall
there be any sale of securities in any jurisdiction in which such
offer, solicitation, sale or exchange would be unlawful prior to
registration or qualification under the securities laws of any such
jurisdiction.
Forward-Looking Statements
This communication contains forward-looking statements that are
based on Cazoo’s current expectations, estimates and projections.
The safe harbor provisions for forward-looking statements contained
in the Securities Act and Securities Exchange Act of 1934, as
amended (the “Exchange Act”) do not apply to any forward-looking
statements that we make in connection with the Exchange Offer,
including forward-looking statements in this communication. The
expectations, estimates, and projections of the business of Cazoo
may differ from its actual results and, consequently, you should
not rely on forward-looking statements as predictions of future
events. These forward-looking statements generally are identified
by the words “believe,” “project,” “expect,” “anticipate,”
“estimate,” “intend,” “strategy,” “future,” “opportunity,” “plan,”
“may,” “should,” “will,” “would,” “will be,” “will continue,” “will
likely result,” and similar expressions. Forward-looking statements
are predictions, projections and other statements about future
events that are based on current expectations and assumptions and,
as a result, are subject to risks and uncertainties. Many factors
could cause actual future events to differ materially from the
forward-looking statements in this press release, including but not
limited to: (1) the implementation of and expected benefits from
our business realignment plan, the wind-down of operations in
mainland Europe, the five-year plan (which extends the revised 2023
plan to 2027), and other cost-saving initiatives; (2) reaching and
maintaining profitability in the future; (3) global inflation and
cost increases for labor, fuel, materials and services; (4)
geopolitical and macroeconomic conditions and their impact on
prices for goods and services and on consumer discretionary
spending; (5) having access to suitable and sufficient vehicle
inventory for resale to customers and reconditioning and selling
inventory expeditiously and efficiently; (6) availability of credit
for vehicle and other financing and the affordability of interest
rates; (7) increasing Cazoo’s service offerings and price
optimization; (8) effectively promoting Cazoo’s brand and
increasing brand awareness; (9) expanding Cazoo’s product offerings
and introducing additional products and services; (10) enhancing
future operating and financial results; (11) achieving our
long-term growth goals; (12) acquiring and integrating other
companies; (13) acquiring and protecting intellectual property;
(14) attracting, training and retaining key personnel; (15)
complying with laws and regulations applicable to Cazoo’s business;
(16) our inability to consummate the Transactions contemplated by
the Transaction Support Agreement as scheduled or at all; (17) the
volatility of the trading price of our Class A ordinary shares,
which may increase as a result of the issuance of the New Equity
and New Warrants pursuant to the Transaction Support Agreement;
(18) the Company’s ability to regain compliance with the continued
listing standards of the NYSE within the applicable cure period;
(19) the Company’s ability to continue to comply with applicable
listing standards of the NYSE; and (20) other risks and
uncertainties set forth in the sections entitled “Risk Factors” and
“Cautionary Note Regarding Forward-Looking Statements” in the
Annual Report on Form 20-F filed with the SEC by Cazoo Group Ltd on
March 30, 2023 and in subsequent filings with the SEC. The
foregoing list of factors is not exhaustive. You should carefully
consider the foregoing factors and the disclosure included in other
documents filed by Cazoo from time to time with the SEC. These
filings identify and address other important risks and
uncertainties that could cause actual events and results to differ
materially from those contained in the forward-looking statements.
Forward-looking statements speak only as of the date they are made.
Readers are cautioned not to put undue reliance on forward-looking
statements. Cazoo gives no assurance that it will achieve its
expectations.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231103770191/en/
Investor Relations: Cazoo: Anna Gavrilova, Head of
Investor Relations, investors@cazoo.co.uk ICR: cazoo@icrinc.com
Media: Cazoo: Peter Bancroft, Interim Communications
Director, press@cazoo.co.uk Brunswick: Simone Selzer +44 20 7404
5959 / cazoo@brunswickgroup.com
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