8-KMaterial AgreementsFinancial EventsExhibits & Filings

CARVANA CO. 8-K Report, Material Agreement (Oct 5, 2020)

Filed October 5, 2020For Securities:CVNA

Summary

Carvana Co. (CVNA) filed an 8-K on October 5, 2020, reporting the successful issuance of $1.1 billion in aggregate principal amount of new senior notes. This offering consisted of $500 million of 5.625% Senior Notes due 2025 and $600 million of 5.875% Senior Notes due 2028. The net proceeds from this issuance were primarily used to redeem in full the company's outstanding 8.875% Senior Notes due 2023, thereby reducing Carvana's overall interest expense and extending its debt maturity profile. The remaining proceeds are allocated for general corporate purposes, including working capital, capital expenditures, and potential business development opportunities. This refinancing demonstrates Carvana's proactive approach to managing its capital structure and debt obligations. By issuing new debt at lower coupon rates and extending maturities, the company aims to improve its financial flexibility and reduce interest costs. The issuance was conducted through private placements to qualified institutional buyers and is guaranteed by certain domestic restricted subsidiaries. The accompanying amendment to Carvana Group, LLC's operating agreement facilitated the capital structure adjustment related to the note offering.

Key Highlights

  • 1Carvana Co. issued $500 million of 5.625% Senior Notes due 2025 and $600 million of 5.875% Senior Notes due 2028, totaling $1.1 billion.
  • 2The new notes were issued on October 2, 2020, with proceeds used to redeem the entire $600 million of outstanding 8.875% Senior Notes due 2023.
  • 3This transaction effectively lowers Carvana's aggregate interest expense and extends its debt maturity profile.
  • 4The Notes are senior unsecured obligations of Carvana Co. and guaranteed by its domestic restricted subsidiaries.
  • 5The issuance was conducted as a private placement to qualified institutional buyers under Rule 144A and Regulation S.
  • 6Remaining proceeds from the offering are designated for general corporate purposes, including working capital, capital expenditures, and strategic growth opportunities.
  • 7A Fifth Amended and Restated Limited Liability Company Agreement of Carvana Group, LLC was executed to accommodate the capital structure adjustments related to the note offering.

Frequently Asked Questions

The primary purpose of this 8-K filing was to report Carvana Co.'s entry into a material definitive agreement related to the issuance of new Senior Notes due 2025 and 2028, and the subsequent termination of the previous debt agreement following the redemption of existing notes.

This issuance replaces higher-interest debt with lower-interest debt and extends the maturity dates. Carvana issued $1.1 billion in new notes at rates of 5.625% and 5.875%, replacing $600 million of notes at 8.875%. This is expected to reduce overall interest expenses and improve financial flexibility by pushing out debt maturities.

The new Senior Notes due 2025 and 2028 are senior unsecured obligations of Carvana Co. and are guaranteed on a senior unsecured basis by Carvana's domestic restricted subsidiaries.

The net proceeds were used to fully redeem the company's outstanding 8.875% Senior Notes due 2023. Any remaining proceeds are intended for general corporate purposes, including funding working capital, capital expenditures, operating expenses, and pursuing business development opportunities such as acquisitions or investments.