8-KMaterial AgreementsFinancial EventsOther Events+1

CARVANA CO. 8-K Report, Material Agreement (Aug 16, 2021)

Filed August 16, 2021For Securities:CVNA

Summary

Carvana Co. (CVNA) filed an 8-K on August 16, 2021, to report the issuance of $750 million in 4.875% Senior Notes due 2029. These notes were offered to qualified institutional buyers and are guaranteed by certain domestic restricted subsidiaries on a senior unsecured basis. The funds raised are intended for general corporate purposes, including working capital, capital expenditures, operating expenses, and strategic business development opportunities such as acquisitions and investments. This financing event provides Carvana with additional capital to fuel its growth initiatives and operational needs. Investors should note the interest rate, maturity date, and the senior unsecured ranking of the notes, which place them on par with existing senior indebtedness but junior to secured obligations. The indenture includes restrictive covenants designed to protect noteholders, with certain covenants potentially being suspended if the notes achieve an investment-grade rating from two major credit rating agencies.

Key Highlights

  • 1Carvana Co. issued $750 million in 4.875% Senior Notes due September 1, 2029.
  • 2The notes are guaranteed on a senior unsecured basis by certain domestic restricted subsidiaries.
  • 3The net proceeds will be used for general corporate purposes, including growth initiatives and potential acquisitions.
  • 4The notes accrue interest at 4.875% per annum, payable semi-annually.
  • 5The notes rank equally with existing and future senior unsecured indebtedness but are effectively junior to secured obligations.
  • 6The indenture contains restrictive covenants that limit certain corporate actions.
  • 7Certain covenants may be suspended if the notes receive an investment-grade rating from two out of three major credit rating agencies.

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, capital expenditures, operating expenses, and pursuing business development opportunities, such as acquisitions or investments in other businesses, products, or technologies.

The Notes are senior unsecured obligations of Carvana Co. and its guarantors. They rank equally in right of payment with existing and future senior indebtedness. However, they rank effectively junior to all secured obligations to the extent of the collateral securing those obligations and structurally junior to debt and liabilities of subsidiaries that are not guarantors.

The Senior Notes bear an interest rate of 4.875% per annum, payable semi-annually on March 1 and September 1, beginning March 1, 2022. They mature on September 1, 2029. The company may redeem the notes on or after September 1, 2024, with certain call provisions and potential make-whole premiums, and a change of control provision requiring an offer to purchase at 101% of the principal amount.

Yes, the indenture contains restrictive covenants that limit Carvana's ability to, among other things, incur additional debt, create liens, pay dividends, make investments, or engage in certain affiliate transactions. However, certain of these covenants will be suspended if the notes are assigned an investment-grade rating by two of the three major credit rating agencies (Fitch, S&P, Moody's) and no default is ongoing.