Summary
Carvana Co. (CVNA) filed an 8-K on July 3, 2019, to report a material definitive agreement related to a securitization transaction. On June 27, 2019, a Carvana subsidiary entered into a Transfer Agreement with a securitization trust. Through this agreement, the trust purchased approximately $470.0 million in principal balances of finance receivables from Carvana's subsidiary.
Key Highlights
- 1Carvana Co. engaged in a securitization transaction involving finance receivables.
- 2A subsidiary of Carvana sold approximately $470.0 million in finance receivables.
- 3The sale occurred on June 27, 2019, through a Transfer Agreement with a securitization trust.
- 4These finance receivables will serve as collateral for asset-backed securities issued by the trust.
- 5This transaction provides liquidity and potentially reduces the need for traditional debt financing by leveraging existing receivables.
- 6The Transfer Agreement is filed as an exhibit to this 8-K.
Frequently Asked Questions
The primary purpose of this 8-K filing is to report a material definitive agreement, specifically a securitization transaction where Carvana Co. sold a significant pool of its finance receivables.
Carvana's subsidiary sold approximately $470.0 million in principal balances of finance receivables.
This securitization allows Carvana to convert its finance receivables into immediate cash, which can be used for various corporate purposes, such as funding operations, growth initiatives, or reducing leverage. It's a way to generate liquidity from its existing assets.
The finance receivables sold will serve as collateral for asset-backed securities (ABS) that the securitization trust will issue. Investors in these ABS will have a claim on the cash flows generated by the underlying receivables.