Cazoo merges share capital in bid to boost NYSE trading prices

Cazoo has completed a ‘reverse stock split’ process to merge its share capital in bid to boost trading values on the New York Stock Exchange (NYSE).

The board at the online car retailer, currently consulting staff over the closure of 15 customer handover centres and a number of vehicle preparation centres after withdrawing from its European territories as part of a bid to boost profitability, voted 95% in-favour of the move yesterday (February 7).

Under the terms of the process issued and unissued share capital will be merged into fewer shares at a higher price.

A statement issued via the NYSE stated that Cazoo’s issued and unissued share capital, par value $0.0001 per share, would be consolidated at a ratio of one-for-20 though the action.

It added: “After giving effect to the reverse stock split and the share increase the Company’s authorized share capital will be $435,500, divided into 165,000,000 Class A ordinary shares of a par value of $0.002 each (the “Class A Shares”), 2,500,000 Class B ordinary shares of a par value of $0.002 each, 50,000,000 Class C ordinary shares of a par value of US$0.002 each and 250,000 preference shares of a par value of US$0.002 each.

“The reverse stock split and share increase will be effective at 4:05 p.m. (ET) on February 8, 2023, and the Class A Shares will begin trading on a split-adjusted basis when the New York Stock Exchange opens for trading on Thursday, February 9, 2023.”

Cazoo’s reverse stock split comes just less than a months after the NYSE began the process of de-listing warrants for the online car retailer as a result of “abnormally low” price levels.

As a result of this week's reverse stock split, the number of Class A shares issuable upon exercise of its 21,129,818 private warrants and 20,124,748 public warrants will be reduced so that each warrant will entitle a holder to buy 1/20th of a Class A share.

The exercise will take the value of each warrant up from $11.50 (£9.51) per share to $230 per share.

At close of trading yesterday, Cazoo’s share price stood at $0.23, representing a 76% decline over the past 12 months.

Back in August AM reported that Cazoo was already in breach of NYSE rules which require listed companies to maintain an average closing share price of at least $1.00 over a consecutive 30 trading-day period or risk being delisted.

Cazoo's shares have remained below $1.00 since July 14, 2022, except for July 23 when they reached $1.01 and August 2 and 3, when their value reached $1.01 and $1.03, respectively.