8-KMaterial AgreementsSecurities & ListingRegulation FD+1

CARVANA CO. 8-K Report, Material Agreement (Aug 21, 2023)

Filed August 21, 2023For Securities:CVNA

Summary

Carvana Co. (CVNA) filed an 8-K on August 21, 2023, detailing a material definitive agreement related to equity financing. The company, through its subsidiary Carvana Group, LLC, entered into a Securities Purchase Agreement with the Garcia Parties (Ernest Garcia II and Ernest Garcia III) for the purchase of approximately $126 million in equity. This transaction involved the sale of Class A LLC Units of Carvana Group and Class B Common Stock of Carvana Co., effectively priced at $46.31 per share of Carvana Co. Class A Common Stock on an as-exchanged basis. The primary purpose of this capital raise is to partially fund Carvana's previously announced cash tender offer for its 5.625% senior unsecured notes due 2025. This move is a significant step in the company's efforts to manage its debt obligations and strengthen its financial position amidst ongoing market conditions. The sale was conducted under an exemption from registration pursuant to Section 4(a)(2) of the Securities Act, with the Garcia Parties represented as accredited investors.

Key Highlights

  • 1Carvana Co. secured $126 million in equity financing from the Garcia Parties (Ernest Garcia II and Ernest Garcia III).
  • 2The financing was executed through a Securities Purchase Agreement for Class A LLC Units of Carvana Group and Class B Common Stock of Carvana Co.
  • 3The effective price per share of Carvana Co. Class A Common Stock on an as-exchanged basis was $46.31.
  • 4Proceeds from this equity issuance are intended to partially fund Carvana's cash tender offer for its 5.625% senior unsecured notes due 2025.
  • 5The transaction closed on August 18, 2023.
  • 6The sale of securities was exempt from registration under Section 4(a)(2) of the Securities Act, with purchasers identified as accredited investors.
  • 7This filing also includes a press release detailing the Securities Purchase Agreement as an exhibit.

Frequently Asked Questions

The primary purpose of this equity issuance is to secure funds to partially finance Carvana's ongoing cash tender offer for its 5.625% senior unsecured notes due 2025. This is part of the company's strategy to manage its outstanding debt.

The Garcia Parties refer to Ernest Garcia II and Ernest Garcia III, who are significant stakeholders and founders/executives of Carvana. They committed to purchasing this equity as part of a previously disclosed Transaction Support Agreement.

No, these securities were not offered to the public. The sale was conducted through a Securities Purchase Agreement and was exempt from registration under Section 4(a)(2) of the Securities Act, as the purchasers (the Garcia Parties) were identified as accredited investors acquiring the securities for investment purposes.

The transaction involved the issuance of Class A LLC Units and Class B Common Stock. While it increases the equity base, the effective price of $46.31 per share of Class A Common Stock (on an as-exchanged basis) provides a reference point for valuation in this specific transaction. The exchange ratio of Class A Units to Class A Common Stock is 5-to-4.