8-KMaterial Agreements

CARVANA CO. 8-K Report, Material Agreement (Mar 19, 2020)

Filed March 19, 2020For Securities:CVNA

Summary

Carvana Co. (CVNA) has announced an amendment to its Master Purchase and Sale Agreement (MPSA) with Ally Bank and Ally Financial, effective March 19, 2020. This amendment allows Ally to purchase a larger volume of finance receivables from Carvana. This strategic move is significant as it replaces the prime component of Carvana's first-quarter 2020 securitization program. Additionally, Carvana has recently completed its first nonprime securitization, further diversifying its financing activities. Both the MPSA amendment and the new nonprime securitization resulted in the sale of receivables at a premium. In total, these transactions, along with ongoing forward-flow sales to Ally, represent approximately $800 million in principal balances of receivables. This indicates strong demand for Carvana's receivables and a positive pricing environment, which should bolster the company's liquidity and financing flexibility during a potentially uncertain economic period.

Key Highlights

  • 1Carvana Co. amended its Master Purchase and Sale Agreement (MPSA) with Ally Bank and Ally Financial to increase the purchase of finance receivables.
  • 2This amendment effectively replaces the prime component of Carvana's Q1 2020 securitization program.
  • 3Carvana has successfully priced its first nonprime securitization.
  • 4Both the MPSA-related sale and the nonprime securitization were transacted at a premium.
  • 5Aggregate principal balance of receivables from these transactions and year-to-date forward-flow sales to Ally totals approximately $800 million.
  • 6These actions enhance Carvana's liquidity and financing flexibility.

Frequently Asked Questions

The amendment allows Ally Bank and Ally Financial to purchase additional finance receivables from Carvana Co., thereby supporting Carvana's financing needs and potentially increasing liquidity.

This amendment and the associated sale of receivables effectively substitute the prime component of Carvana's planned securitization for the first quarter of 2020.

Transacting at a premium suggests that Carvana was able to sell its finance receivables for more than their face value, indicating strong market demand and favorable pricing for the company's assets.

In aggregate, the amendment-related sale, the new nonprime securitization, and year-to-date ordinary forward-flow sales to Ally amount to approximately $800 million in principal balances of receivables.