A Carvana glass tower sits illuminated in Oak Brook, Illinois, on February 23, 2022.
Armando L. Sanchez | Tribune News Service | Getty Images
Carvana, the used car retailer, announced on Wednesday that it has reached a debt restructuring agreement that will significantly reduce its total outstanding debt by over $1.2 billion. The company stated that this agreement will eliminate more than 83% of its unsecured note maturities for 2025 and 2027, while also reducing its required cash interest expense by more than $430 million annually for the next two years.
In a separate public filing, Carvana revealed its plans to sell up to $1 billion in shares as part of its capital raising and operational restructuring efforts. The news of the debt restructuring and share sale had a positive impact on the company’s stock, with shares opening more than 35% higher and closing up 40% at $55.80 per share.
Carvana CFO Mark Jenkins expressed his excitement about the transaction, stating, “This transaction significantly increases our financial flexibility by reducing our total debt, extending maturities, and lowering near-term cash interest expense as we continue to execute our plan of driving significant profitability and returning to growth.”
The debt restructuring agreement covers approximately $5.2 billion of Carvana’s senior, unsecured bonds and includes Apollo Global Management, its largest bondholder. Under the terms of the deal, creditors will receive new secured notes, with the new debt maturing at a later date than the old notes.
Carvana’s stock performance in 2023.
Carvana reported that its long-term debt at the end of the second quarter was $6.5 billion, slightly lower than the previous year. This debt accounted for the majority of the company’s total liabilities, which stood at nearly $9.3 billion at the end of the second quarter.
The company has been working on this debt restructuring deal for over a year, aiming to address the heavy debt
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Denial of responsibility! Vigour Times is an automatic aggregator of Global media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, and all materials to their authors. For any complaint, please reach us at – [email protected]. We will take necessary action within 24 hours.
