Lenders to Cazoo, the British-based online car retailer, have enlisted bankers to spearhead talks with the company about a £510m debt restructuring.
Sky News understands that the holders of convertible notes due for repayment in 2027 have engaged PJT Partners to advise them on negotiations with the company.
The discussions were flagged by Cazoo in a statement to the New York Stock Exchange, where it is listed, earlier this week.
Cazoo's share price performance since it went public in 2021 through a merger with Ajax I, a special purpose acquisition company (SPAC), has been disastrous.
Nevertheless, its operating performance has proved more robust, with the company declaring itself "very pleased" with its sales in the second quarter of 2023.
Last year, it pulled out of European markets to focus on the UK, while it has also sought to reduce its cash burn by scaling back its array of high-profile sports sponsorship deals.
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The company was founded by Alex Chesterman, the founder of property portal Zoopla and one of Britain's most successful entrepreneurs.
One person close to Cazoo pointed out that it had more than £200m of cash on its balance sheet, meaning that there was ample time to conduct negotiations with the noteholders.
Some analysts believe the debt restructuring talks are expected to be followed by an offer to take the company private again.
Cazoo, which is being advised by bankers at Goldman Sachs, declined to comment on Friday.