Carvana shares rise on $1.2 billion debt reduction deal

  • Carvana has reached an agreement with noteholders to reduce the used car seller’s total debt by more than $1.2 billion, the company said Wednesday.
  • The deal was announced alongside the company’s second quarter earnings.
  • Shares of the company rose in pre-market trading on Wednesday after closing around 7% ahead of the announcement.

The Carvana Glass Tower will light up in Oak Brook, Illinois on February 23, 2022.

Armando L. Sanchez | Tribune News Service | Good pictures

Carvana has entered into an agreement with noteholders to reduce the used car seller’s total debt by more than $1.2 billion. said Wednesday.

Carvana said the deal will eliminate more than 83% of Carvana’s unsecured notes due 2025 and 2027, reducing its required cash interest expense by more than $430 million per year over the next two years.

Shares of the company jumped 30% in pre-market trading on Wednesday after stopping around 7% before the announcement.

“This transaction significantly increases our financial flexibility by reducing our total debt, extending maturities, and reducing near-term cash interest expense as we continue to execute on our plan to return to significant profitability and growth,” Carvana CFO Mark Jenkins said in a statement. .

Carvana’s restructuring agreement includes approximately $5.2 billion of senior, unsecured bonds and includes its largest bondholder, Apollo Global Management. Under the terms of the agreement, the borrowers will receive new secured notes.

The agreement was announced in association with the company Second quarter earnings.

Carvana’s debt prior to the deal was approximately $8.5 billion, including $5.7 billion, or 74.5%, of unsecured notes.

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Carvana has been in such a deal for more than a year as shares plummeted due to heavy debt and mismanagement during the coronavirus pandemic.

This is a growing story. Check back for more updates.

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