A Carvana glass tower sits illuminated in Oak Brook, Illinois, Feb. 23, 2022.
Armando L. Sanchez | Tribune News Service | Getty Images
Carvana has reached a debt restructuring agreement that will reduce the used car retailer’s total debt outstanding by more than $1.2 billion, the company said Wednesday.
Carvana said the agreement will eliminate over 83% of its 2025 and 2027 unsecured note maturities and lower its required cash interest expense by more than $430 million per year for the next two years.
In a separate public filing Wednesday, the company said it will sell up to $1 billion in shares as it attempts to raise capital and restructure its operations.
Shares of the company jumped more than 30% in premarket trading Wednesday after being off roughly 7% before the announcement. Carvana stock this year has soared from roughly $4 per share to start the year to roughly $40 as of Tuesday’s close. That is still about 90% off from the stock’s all-time high of nearly $377 notched in August 2021.
“This transaction significantly increases our financial flexibility by reducing our total debt, extending maturities, and lowering near-term cash interest expense as we continue to execute our plan of driving significant profitability and returning to growth,” Carvana CFO Mark Jenkins said in a statement.
Carvana said its restructuring agreement covered roughly $5.2 billion of senior, unsecured bonds and included Apollo Global Management, its largest bondholder. Under the terms of the deal, creditors will get new secured notes. The new debt will also come due later than the old notes.
Carvana’s stock performance in 2023.
Carvana’s debt before the deal was roughly $8.5 billion, including $5.7 billion, or 74.5%, in unsecured notes, according to FactSet.
The company has been working on such a deal for more than a year as the stock went into freefall due to a heavy debt load and improper management during the coronavirus pandemic.
The agreement was announced in conjunction with the company’s second-quarter earnings. Here’s what Carvana reported.
- Loss
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