8-KMaterial AgreementsRegulation FDOther Events+1

CARVANA CO. 8-K Report, Material Agreement (Aug 2, 2023)

Filed August 2, 2023For Securities:CVNA

Summary

Carvana Co. (CVNA) has filed an 8-K report detailing significant debt restructuring activities initiated on August 1st and announced on August 2nd, 2023. The company is launching Exchange Offers for its 2027, 2028, 2029, and 2030 senior unsecured notes, allowing eligible holders to exchange them for up to $4.275 billion in new, higher-interest senior secured notes across three tranches. Concurrently, Carvana is commencing a Cash Tender Offer to repurchase any and all of its 2025 senior unsecured notes for cash at a 15% discount to par, up to a maximum of $425 million. These actions are accompanied by Consent Solicitations to amend the indentures governing the existing notes, aiming to eliminate restrictive covenants and certain default provisions.

Key Highlights

  • 1Carvana launches comprehensive debt exchange and tender offers to restructure its outstanding senior unsecured notes.
  • 2New debt offerings include up to $4.275 billion in senior secured notes with varying interest rates and PIK/cash components across three tranches.
  • 3The company is offering to purchase any and all outstanding 2025 Senior Notes for cash at 85% of the principal amount, capped at $425 million.
  • 4Consent solicitations are underway to amend existing note indentures, seeking to remove restrictive covenants and certain default provisions.
  • 5The moves are part of a broader effort to strengthen the company's balance sheet and financial flexibility.
  • 6Transaction Support Agreement (TSA) first amendment indicates progress and alignment with key stakeholders, including the Garcia Parties and a significant portion of noteholders.

Frequently Asked Questions

Carvana is aiming to restructure its debt by exchanging existing senior unsecured notes for new senior secured notes and by repurchasing some of its debt. The goal is to improve its balance sheet, enhance financial flexibility, and potentially reduce near-term debt service obligations.

The new senior secured notes are offered in three tranches with varying principal amounts and interest rates, including both cash and Paid-In-Kind (PIK) interest components that adjust over time. For example, one tranche offers 9.0%/12.0% Cash/PIK Senior Secured Notes due 2028, starting with higher PIK interest and transitioning to cash.

Carvana is offering to buy back all of its 5.625% senior unsecured notes due 2025 at a price of 85% of their principal amount, plus accrued interest. This offer is capped at $425 million.

Carvana is soliciting consents from noteholders to amend the existing indentures. The primary aim is to remove substantially all restrictive covenants and certain events of default. This would give the company more operational and financial freedom.