Summary
Carvana Co. (CVNA) has completed a private placement of 100,000 shares of its newly created Class A Convertible Preferred Stock to DDFS Partnership LP, an affiliate of Dundon Capital Partners, for $100 million. This transaction, exempt from registration under Section 4(a)(2) of the Securities Act, generated net proceeds of approximately $98.5 million intended for general corporate purposes. The Preferred Stock ranks senior to Carvana's Class A common stock regarding dividends and liquidation. It carries a 5.50% cumulative annual dividend, payable quarterly, and has an initial stated value of $1,000 per share. Importantly, holders of this Preferred Stock generally do not have voting rights, except as required by Delaware law, but possess limited special approval rights on the issuance of senior or pari passu equity securities. They also gain board representation rights if dividends are in arrears for six or more quarters.
Key Highlights
- 1Carvana raised $100 million through a private placement of convertible preferred stock.
- 2The investment was made by DDFS Partnership LP, an affiliate of Dundon Capital Partners.
- 3The preferred stock is convertible into Class A common stock at an initial rate of 50.78 shares per preferred share, implying a conversion price of approximately $19.69 per common share.
- 4The preferred stock accrues a 5.50% cumulative annual dividend.
- 5Preferred stockholders have limited voting rights and special approval rights concerning new senior or equal-ranking equity issuances.
- 6Carvana has a mandatory conversion option for the preferred stock if the common stock's volume-weighted average price reaches 150% of the conversion price for 10 consecutive trading days.
- 7Proceeds will be used for general corporate purposes.