Cazoo has been successful in getting shareholders to agree to an exchange offer for the company’s convertible notes to help Cazoo reduce its debts from $630 million to $200 million.

Cazoo agreed a debt restructuring plan in September and earlier this month started proceedings to restructure its debt to reduce debt levels to ensure it can continue listing on the NYSE.

It made the exchange offer to holders of its convertible notes, which are used to finance short term debt. In this case holders are to be repaid with equity in the company rather than through cash plus interest.

All holders of its notes that are due in 2027, valued at $630 million, have agreed to take part in the exchange offer. This was confirmed at an Extraordinary General Meeting held yesterday when all resolutions were passed.

Interest on the new notes will accrue at 6% annually from their date of issue, with a minimum of 4% payable in cash and at the option of the company, up to 2% payable in kind.

Cazoo expects the transaction to close in Q4 2023, subject to satisfaction of the closing conditions.

The exchange offer is one of a series of actions the company is implementing to reduce its level of debt. This was a result of Cazoo receiving a written notice from the NYSE for not meeting its listing rules.

Companies listed on the NYSE must not have an average market cap of below $50 million for 30 consecutive days of trading. By falling below that level, Cazoo was at risk of being liable to buy back the $630 million of notes itself if its shares were no longer able to trade on the NYSE.

“Shareholder approval for the transactions at today’s EGM, together with consent received previously from 100% of holders of our convertible notes, signals strong ongoing support for Cazoo’s business model and strategy,” said Alex Chesterman, founder & executive chairman of Cazoo.

“The Transactions will significantly reduce Cazoo’s indebtedness from $630 million to $200 million and enhance our financial flexibility. We can now leverage the meaningful progress delivered since the beginning of the year to achieve better unit economics and lower costs.”

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