8-KMaterial AgreementsFinancial EventsOther Events+1

CARVANA CO. 8-K Report, Material Agreement (Mar 30, 2021)

Filed March 30, 2021For Securities:CVNA

Summary

Carvana Co. (CVNA) announced on March 29, 2021, the issuance of $600 million in 5.500% Senior Notes due 2027. These notes were offered to qualified institutional buyers and foreign investors through private placement. The net proceeds are intended for general corporate purposes, including working capital, capital expenditures, operating expenses, and strategic growth opportunities such as acquisitions and investments. This debt issuance represents a significant capital raise aimed at fueling the company's expansion and operational needs. The notes are guaranteed by Carvana's domestic restricted subsidiaries and are classified as senior unsecured obligations, ranking equally with existing senior debt but effectively junior to secured debt. The company retains the option to redeem the notes starting April 15, 2024, with provisions for early redemption using equity proceeds or in the event of a change of control. The indenture includes restrictive covenants that, if the notes achieve investment-grade status, may be suspended.

Key Highlights

  • 1Carvana Co. issued $600 million in 5.500% Senior Notes due April 15, 2027.
  • 2The notes were issued through a private placement to qualified institutional buyers and non-U.S. persons.
  • 3Proceeds will be used for general corporate purposes, including working capital, capital expenditures, and potential acquisitions/investments.
  • 4The notes are senior unsecured obligations, guaranteed by certain domestic restricted subsidiaries.
  • 5They rank equally with existing senior indebtedness but junior to secured debt.
  • 6Carvana has redemption options starting April 15, 2024, including a change of control provision.
  • 7Restrictive covenants are in place, with potential suspension if investment-grade ratings are achieved.

Frequently Asked Questions

The net proceeds from the issuance of these Senior Notes are intended for Carvana's general corporate purposes. This includes funding working capital needs, capital expenditures, operating expenses, and strategically pursuing business development opportunities like acquisitions or investments in other businesses, products, or technologies to support the company's growth.

The Senior Notes carry an annual interest rate of 5.500% and are due to mature on April 15, 2027. Interest will be paid semi-annually in arrears on April 15 and October 15 of each year, with the first payment expected on October 15, 2021.

The Senior Notes are unsecured obligations of Carvana Co. and its Guarantors. They are guaranteed on a senior unsecured basis by Carvana's domestic restricted subsidiaries (excluding certain subsidiaries related to securitization facilities and immaterial entities). The notes rank equally with other senior unsecured indebtedness but are effectively junior to any secured indebtedness.

Carvana can redeem some or all of the notes on or after April 15, 2024, at specified redemption prices. Prior to that date, they can redeem up to 35% of the principal amount using proceeds from equity offerings or any portion of the notes at a 'make-whole' premium. Additionally, a change of control event triggers an offer to repurchase all notes at 101% of their principal amount.