Revealed: Tech unicorn Wejo collapsed into administration owing over $100m after investor's 11th hour decision – Business Live

Wejo had been listed on the Nasdaq in the USA.
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Wejo, which had once been valued at over $1bn, collapsed into administration owing over $100m, a new document has confirmed.
The Manchester-headquartered technology company appointed Leonard Curtis in July after failing to secure the funding it needed to continue trading.
When the firm was appointed, all of Wejo's UK employees, estimated to be around 150 people, were made redundant.
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Now, a new document filed with Companies House by Leonard Curtis has revealed how an investor adding an extra clause to a funding agreement at the last minute and then pulling out of the deal led to Wejo collapsing.
The document also details how much Wejo owed to its creditors when it collapsed and if there is any possibility they will be repaid.
Wejo was founded at the end of 2013 by Richard Barlow and based at Manchester's ABC Building in Quay Street.
Its main activity was to develop and promote the use of cutting edge technology using big data, telematics and mobile data primarily sourced from connected vehicles.
Despite being headquartered in Manchester, the group mainly traded in the USA.
In November 2021 Wejo, which was backed by US giant General Motors, floated on the Nasdaq after completing a reverse merger.
The deal with Virtuoso Acquisition Corp was first announced at the start of June 2021 and valued the business at $800m. As a result of the move, Wejo received about $225.7m.
Alongside chief executive Richard Barlow and General Motors, other shareholders included Sompo Holdings, chairman Tim Lee and Apollo Capital Management.
Leonard Curtis, in its report filed with Companies House, said: "The company historically incurred operating losses from inception to date.
"As the company and the wider group obtained investment to increase the markets and customers it serves, operating losses were expected to continue until the group reached the necessary scale to generate cash profits from its operations.
"The group historically relied on private equity and debt to fund its operations.
"It is estimated that at the start of 2022, the group had an estimated cash burn of c.$10m per month and was working to actively reduce cash burn throughout 2022, ending the year at a c.$5m-$6m month cash burn that continued to decline in 2023."
Wejo's directors first approached Leonard Curtis in November 2022 for advice on their fiduciary duties while it underwent a proposed recapitalisation exercise.
The following month, the company received $10m from General Motors by way of a convertible loan.
In January 2023, Wejo announced it had entered into a definitive business combination agreement to combine with a technologies investment trust funder (Investor 1).
At the time, Wejo said the deal had the ability to raise up to $100m to fund its growth initiatives and execute its strategic goals as well as potentially reach cash flow breakeven by the second half of 2025. The deal had been expected to complete in August.
In February 2023, Wejo also received a c.$3.5m loan from a private investor while it also received an extra $20m investment from an unnamed "well-known tech company" who was not already a shareholder.
Leonard Curtis added: "Investor 2 had a strong desire and clearly started competitive desire to unseat its competitor in the Wejo relationship and therefore negotiated a PIPE investment commitment and a significantly expanded commercial relationship with the first step (being) to provide material technology services to the company.
"It was anticipated that the support from Investor 2 would open further opportunity for other investors of c.$40m+.
"On 31 March 2023 both parties entered into a letter of intent… and a period of due diligence and commercial contract negotiations with Investor 2 commenced.
"Once this public announcement was made, the support that had been expressed from the other tech company was no longer available."
Investor 2's personnel then offered to make an investment of $5m which then increased to $7m which then led to interest from other potential backers.
The administrators added: "Subsequent to Investor 2 completing its due diligence, funding documentation was agreed and signed on 16 May 2023 and held in escrow by their instructed legal team with the expectation that the transaction would be completed the same day.
"However, Investor 2 advised a further condition was required to its terms which had not been previously discussed or agreed as part of the formal agreement documents.
"The condition was that the group was to secure an additional investor to match Investor 2's (up to $7m).
"The change in terms put immense pressure on the group, which was already experiencing cashflow difficulties due to its high cost base, due to the time delays encountered in being able to achieve the new terms.
"The group worked hard towards meeting the additional terms imposed on it by Investor 2 and was close to achieving the additional funding.
"This was acknowledged verbally by one of the investors in the anticipated equity raise on 25 May 2023 in a call with Investor 2, and Investor 2 representatives stated to the investor that they would be funding their $7m investment later that day."
However, Leonard Curtis said that late on 26 May, Investor 2 withdrew from the transaction "citing something had arisen as part of its due diligence process". The investor "however stated clearly" that the issue was not connected to Wejo.
Leonard Curtis added: "The group was wholly reliant upon receiving investors' funds, until it reached its break even position predicted to be in late 2024/early 2025, and was reliant upon receiving the funds pledged by Investor 2 to continue trading.
"The group was left with no immediate available funding to enable it to continue to trade.
"Over the course of the bank holiday weekend the group sought advice from its various legal advisors and Leonard Curtis in respect of the insolvency of the company.
"The group also reached out to key investors to determine if they would proceed without Investor 2's leading investment, but none of the syndicated investors would step in quickly without additional information on the reason for the change."
Wejo was left without enough money to pay its salaries on May 31 and was therefore considered insolvent.
The company filed its first notice of intention to appoint an administrator (NOIA) and all staff was asked to stop working.
Wejo instructed Atlas Technology Group (ATG) to market its business and assets.
ATG made contact with 74 potential interested parties while 21 non-disclosure agreements were signed.
An initial deadline for offers was set for 9 June while, at the same time, Wejo's management explored the possibility of raising investment to buy the business and assets themselves.
The first NOIA expired on 12 June and a second was filed the next day as final offers had not been received.
On 20 June an interested party provided a revised offer which was lower than its original, "citing the lack of information around certain liabilities of the company".
A deadline for best and final offers was set for 22 June.
Wejo's management team submitted an offer, which was higher than the first offer received by the interested party but was subject to receiving investment and was not capable of progressing to sale contacts at that time, Leonard Curtis said.
The second NOIA expired on 26 June and a third was filed the following day to allow time for the interested parties to complete their due diligence processes, get their funding in place and present their final offers.
However on 10 July, when a third NOIA was due to expire, no offer looked to be progressing to the next stage and Wejo's directors appointed Leonard Curtis as administrators.
Leonard Curtis said that because no sale had been agreed, it had "no option" but to make all UK employees redundant.
The administrators instructed ATG to re-market Wejo's business and assets for sale, a process which remains ongoing.
For 2022, Wejo's turnover totalled $170,000, up from $42,000 in 2021, but down significantly from $15.6m in 2020.
Last year it also made a pre-tax loss of $122.9m while it lost $159.6m in 2021 and $63.6m in 2020.
For the period to the end of February 2023, Wejo generated no turnover while it made a pre-tax loss of $8.3m.
Leonard Curtis said it is estimated that Glas, as a secured creditor, is owed around $15.5m.
Securis Investment Partners is also named as a secured creditor and owed around $39m.
Leonard Curtis said any chance both companies will recover any of the money owed depends on the sale of Wejo's business and assets.
As preferential creditors, it is also estimated that 147 former employees of Wejo are owed in the region of $635,490 in wage arrears and holiday pay.
The same number of staff also have unsecured claims of almost $2m. HMRC is also owed an estimated $2.5m.
Overall, according to the document filed by Leonard Curtis, creditors were owed over $100m when Wejo entered administration.
Leonard Curtis said that, based on current indications, it is not anticipated that there will be enough funds to distribute any money to preferential creditors, HMRC or unsecured creditors.


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