8-KMaterial AgreementsShareholder MattersCorporate Changes+1

CARVANA CO. 8-K Report, Agreement Terminated (Jun 6, 2024)

Filed June 6, 2024For Securities:CVNA

Summary

Carvana Co. (CVNA) filed an 8-K on June 5, 2024, announcing the termination of its Amended and Restated Section 382 Rights Agreement, also known as the Tax Asset Preservation Plan, effective June 4, 2024. This plan was initially put in place to preserve the company's tax attributes. Its termination means the company no longer deems it necessary for this purpose. Concurrently, Carvana eliminated its Series B Preferred Stock, which was linked to this rights agreement, returning those shares to its authorized but undesignated stock. In addition to the termination of the tax asset preservation plan, the company provided an update on its second-quarter activities through June 6, 2024. Carvana has actively reduced its debt by repurchasing $250 million in face principal amount of its Senior Secured Notes due 2028. Furthermore, the company raised approximately $350 million in gross proceeds by selling about 3 million shares of Class A Common Stock through its at-the-market offering program. The company also reaffirmed its previous outlook for the second quarter, expecting a sequential increase in its year-over-year growth rate for retail units and a sequential increase in Adjusted EBITDA.

Key Highlights

  • 1Termination of Tax Asset Preservation Plan (Section 382 Rights Agreement) effective June 4, 2024.
  • 2Elimination of Series B Preferred Stock, which was tied to the terminated rights agreement.
  • 3Repurchase and cancellation of $250 million (face value) of 9.0%/12.0% Senior Secured Notes due 2028.
  • 4Raised approximately $350 million in gross proceeds by selling 3 million shares of Class A Common Stock via at-the-market program.
  • 5Reaffirmed Q2 2024 outlook: expect sequential increase in year-over-year retail unit growth rate.
  • 6Reaffirmed Q2 2024 outlook: expect sequential increase in Adjusted EBITDA.
  • 7Weighted average purchase price for debt repurchase was 103.4% (100.4% inclusive of PIK interest benefit).

Frequently Asked Questions

The termination of the Tax Asset Preservation Plan indicates that Carvana no longer believes it is necessary to protect its valuable tax attributes. This action also led to the elimination of the Series B Preferred Stock, which was intrinsically linked to the rights agreement associated with the plan.

As of June 6, 2024, Carvana repurchased and cancelled $250 million in face principal amount of its 9.0%/12.0% Cash/PIK Senior Secured Notes due 2028. The aggregate purchase price was $259 million.

Through its at-the-market offering program up to June 6, 2024, Carvana sold approximately 3 million shares of Class A Common Stock, generating gross proceeds of approximately $350 million.

Carvana reaffirmed its previously issued outlook for the second quarter of 2024. The company expects a sequential increase in its year-over-year growth rate for retail units sold and a sequential increase in Adjusted EBITDA.