8-KMaterial AgreementsExhibits & Filings

CARVANA CO. 8-K Report, Material Agreement (Oct 1, 2019)

Filed October 1, 2019For Securities:CVNA

Summary

Carvana Co. (CVNA) filed an 8-K on September 30, 2019, reporting a material definitive agreement related to a securitization transaction. On September 27, 2019, a subsidiary entered into a Transfer Agreement with a newly established securitization trust. Through this agreement, the trust purchased approximately $600.0 million in principal balances of finance receivables from Carvana's subsidiary. These purchased finance receivables will serve as collateral for asset-backed securities to be issued by the securitization trust. This transaction represents Carvana's continued engagement in securitization activities to finance its operations and growth, providing liquidity by converting future receivables into immediate capital. Investors should note that this is a financing activity and not an indication of revenue growth directly, but rather a method for funding its business model.

Key Highlights

  • 1Carvana Co. (CVNA) entered into a material definitive agreement on September 27, 2019.
  • 2The agreement is a Transfer Agreement between a Carvana subsidiary and a securitization trust.
  • 3Approximately $600.0 million in principal balances of finance receivables were sold.
  • 4These finance receivables will collateralize asset-backed securities issued by the securitization trust.
  • 5The transaction is a part of Carvana's ongoing securitization strategy.
  • 6This represents a financing activity to generate liquidity for the company.

Frequently Asked Questions

The main purpose of the Transfer Agreement is to facilitate a securitization transaction. A subsidiary of Carvana sold approximately $600.0 million of finance receivables to a securitization trust, which will then use these receivables as collateral to issue asset-backed securities.

This transaction is a financing activity that allows Carvana to convert its future receivable streams into immediate cash. This provides liquidity, which is crucial for funding its business operations, inventory, and growth initiatives, rather than directly impacting profitability.

Finance receivables, in this context, likely refer to the outstanding balances of loans made to Carvana customers who financed their vehicle purchases through Carvana or its related financing arms.

The filing does not explicitly state whether Carvana guarantees the asset-backed securities. However, it is standard practice in securitization that the securities are backed by the quality of the underlying assets (the finance receivables), and the issuing trust is responsible for repayment. The specific terms of any guarantee or recourse would be detailed in the securitization trust's offering documents, not typically in this 8-K filing.