8-KMaterial AgreementsExhibits & Filings

CARVANA CO. 8-K Report, Material Agreement (Dec 30, 2019)

Filed December 30, 2019For Securities:CVNA

Summary

Carvana Co. (CVNA) filed an 8-K on December 29, 2019, reporting a material definitive agreement related to a securitization transaction. A subsidiary of Carvana entered into a Transfer Agreement on December 27, 2019, selling approximately $520.0 million in principal balances of finance receivables to a securitization trust. These receivables will serve as collateral for asset-backed securities issued by the trust. This transaction represents a key financing activity for Carvana, as it allows the company to convert its originated finance receivables into cash. This funding mechanism is crucial for supporting its growth strategy by providing liquidity to originate more auto loans and purchase more vehicles. Investors should note that while this agreement enhances liquidity, it also involves the transfer of future revenue streams from these receivables.

Key Highlights

  • 1Carvana Co. (CVNA) entered into a material definitive agreement on December 27, 2019.
  • 2The agreement is a Transfer Agreement related to a securitization transaction.
  • 3A Carvana subsidiary sold approximately $520.0 million in principal balances of finance receivables.
  • 4The buyer is a statutory trust established for the securitization (the 'securitization trust').
  • 5The finance receivables will serve as collateral for asset-backed securities issued by the trust.
  • 6This transaction is designed to provide Carvana with liquidity to support its operations and growth.

Frequently Asked Questions

The primary purpose of this 8-K filing is to disclose Carvana's entry into a material definitive agreement concerning a securitization transaction, through which the company is raising capital by selling finance receivables.

Carvana's subsidiary transferred approximately $520.0 million in principal balances of finance receivables in this securitization transaction.

Finance receivables refer to the money owed to Carvana by its customers for vehicle purchases financed by the company. These are essentially auto loans originated by Carvana.

This securitization provides Carvana with immediate liquidity by converting future loan payments into cash. This capital can be used for various corporate purposes, including funding further vehicle inventory and loan originations, which supports the company's growth model. However, it also means Carvana no longer benefits from the future interest income on these specific receivables.