NEW YORK - Vroom (OTC:VRMMQ), Inc. (NASDAQ: VRM), an automotive finance company trading at $6.77 per share near its 52-week low, announced today that it has completed its financial restructuring and emerged from the prepackaged Chapter 11 bankruptcy proceedings. According to InvestingPro analysis, the company appears undervalued despite its challenges. This move is expected to provide the company with a more robust financial structure by eliminating long-term debt at the corporate level.
The restructuring process included the conversion of unsecured convertible senior notes into equity, effectively reducing the company's debt burden. As a result of the recapitalization, Vroom has implemented a 1-for-5 reverse stock split, leaving approximately 5.1 million total shares outstanding. Additionally, warrants to purchase shares of Vroom's common stock now carry an exercise price of $60.95, adjusted from the pre-restructuring price of $12.19.
According to Vroom, trade creditors and all other allowed general unsecured creditors will be paid in full, aligning with the terms of the Chapter 11 case. CEO Tom Shortt expressed confidence in the company's future, citing a strengthened balance sheet and a focus on executing Vroom's Long-Term Strategic Plan. InvestingPro data shows the company maintains a current ratio of 2.7, though its overall financial health score remains weak at 1.5 out of 5.
The company's subsidiary, United Auto Credit Corporation (UACC), remains responsible for its own debt related to asset-backed securitizations and trust-preferred securities. Prior to January 2024, Vroom also operated an ecommerce platform for buying and selling used vehicles, which has since been discontinued as part of a strategic shift.
Several advisory firms played key roles in the restructuring, including Porter Hedges LLP and Latham & Watkins LLP as legal counsel, and Stout Risius Ross, LLC as financial advisor.
This announcement marks a significant milestone for Vroom as it seeks to stabilize its operations and focus on its core business areas, with current annual revenue of $906.17M despite an EBITDA of -$174.92M. The information is based on a press release statement, and investors are advised to consider the forward-looking nature of these statements, which involve risks, uncertainties, and assumptions that could affect actual future results. For deeper insights into Vroom's financial health and valuation metrics, consider accessing additional analysis through InvestingPro.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.