- Management provides protection from creditors as Cazoo explores a sale
Cazoo has asked administrators to provide temporary protection from creditors while its bosses explore a sale of the online used car retailer.
David Soden and Matthew Mawhinney of Teneo Financial Advisory will come in as joint administrators and have already started the process of placing Cazoo Group into voluntary liquidation.
The upgrade, which follows waves of operational and balance sheet restructuring, puts more than 200 jobs at risk, with Cazoo already forced to cut 728 jobs this year.
Cazoo is now valued at just $30 million and is listed in New York with a valuation of $7 billion in 2021.
Cazoo’s downfall marks a dramatic turn from the lockdown era, when the temporary closure of physical car dealerships led to a surge in people buying vehicles online.
In 2021, it was listed on the New York Stock Exchange with a valuation of $7 billion. Now it’s worth only $30 million.
Cazoo has been selling non-core parts of the business to focus on its marketplace model, which allows consumers to buy and sell cars under a single brand.
Explaining a violation of New York Stock Exchange rules and the failure to report its results, Cazoo on Tuesday blamed “the significant amount of time spent by management pursuing strategic initiatives and the company’s pivot toward the market model.
It also highlighted “liquidity concerns whereby we would not be able to demonstrate our ability to continue as a going concern in the medium to long term.”
The group has been exploring a sale and Motors.co.uk is understood to be interested in Cazoo’s market offering.
Cazoo was launched in 2018 by Alex Chesterman, the founder of Zoopla LoveFilm, who modeled the company on Carvana, the American retailer known for storing cars in glass-tower vending machines.
However, while the company’s sales continued to increase after Covid-related restrictions ended, losses of $704 million in 2022 forced the group to make major layoffs and close its operations in the European Union.
Chesterman exited the business last year after it exchanged $630 million of debt for $200 million in bonds and stocks. At the time, Cazoo was worth only $12 million.
Bad mistake: Cazoo has been an active sponsor of global sporting events, such as the World Snooker Championship.
Despite financial difficulties, Cazoo has spent millions sponsoring numerous sporting organisations, including the Welsh Rugby Union, the Professional Darts Corporation and the World Snooker Championship.
It used to sponsor the Hundred cricket tournament and many prominent European football teams, including Aston Villa, Bologna, Valencia and Olympique Marseille.
Administrators Teneo said Cazoo has already sold its entire vehicle inventory, repaid all associated storage loans and “undertaken a number of off-market asset sales processes”.
He added: “Along with other initiatives, the successful transition has significantly reduced the group’s cash burn, resulting in a cash position in excess of £98 million as at 13 May 2024, compared to £113 million as at 31 May 2024. December 2023.
‘The Marketplace model is already established, generating revenue and performing above expectations with interest from almost a hundred car dealers, including many well-known names wanting to trade on the Cazoo platform.
‘Following the successful transition of the Group, to optimize profitability for creditors, the administration filing marks the next appropriate step in the restructuring of the business.
‘The Director has placed the Companies into administration to allow the Joint Administrators to continue discussions with new and existing parties interested in the Market business, with a view to concluding a sale in the coming weeks.’
