Freshfields advises Cazoo in restructuring agreement with Key Noteholders
Freshfields has advised Cazoo Group Ltd (NYSE), the UK’s leading independent online car retailer, in a restructuring agreement with noteholders representing 75% of the company’s $630 million aggregate principal amount of 2.00% convertible senior notes due 2027 and shareholders representing more than 25% of its outstanding shares. This agreement is intended to improve Cazoo’s financial flexibility and deleverage its capital structure.
In connection with the restructuring agreement, the company will conduct an exchange offer in which it will offer the holders of $630 million principal amount of the company’s convertible notes, in exchange for the convertible notes, (1) $200 million principal amount of newly issued senior secured notes due 2027 and (2) newly issued Class A ordinary shares such that following the consummation of the transaction, the holders of convertible notes will hold 92% of the company’s outstanding Class A ordinary shares. The company agreed to register the Class A ordinary shares to be issued to the holders of the convertible notes on a registration statement on Form F-3 for resale. In addition, the existing shareholders of the company’s Class A ordinary shares will retain pro rata 8% of the post-transaction Class A ordinary shares outstanding and will receive three tranches of new warrants which provide the opportunity to acquire further Class A ordinary shares in the future depending upon the achievement of equity value hurdles of $525 million, $1.025 billion and $1.5 billion. The company agreed that the new warrants and Class A ordinary shares underlying the new warrants will be issued and registered on a registration statement on Form F-1. The closing of the transaction is subject to customary closing conditions, as well as the company obtaining the affirmative vote of at least 66 2/3% of the holders of Class A ordinary shares in respect of which votes are cast to approve the transactions and the affirmative vote of at least 50% of the holders of Class A ordinary shares in respect of which votes are cast to approve a reverse stock split.
The Freshfields team was led by corporate partners Valerie Ford Jacob and Michael Levitt, counsel Tracy Zhang and associates Brandall Nelson, Alexander Canahuate, Zo Khalid, Amy Di Pauli and Yunah Ko. Restructuring and insolvency advice was provided by partner Richard Tett, Catherine Balmond, Lindsay Hingston, Mark Liscio and Scott Talmadge, counsel Samantha Braunstein and associates Alex Rich, Adam Jones, Ali Muffenbier, Eleni Rawson, Nathan Greenberg, Anna Bensoussan, and Fredrik Money. Finance advice was provided by partner Carol van der Vorst and associate Sonam Cheema. People & Reward advice was provided by partners Alice Greenwell and Lori Goodman and associates Guy Huffen and Lina Zhu. Dispute resolution advice was provided by partner Doru Gavril. Intellectual Property advice was provided by Giles Pratt. Tax advice was provided by partners Claude Stansbury and Paul Davison and counsel Dennis Caracristi.
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